The SAGE

Handbook of

Organizational
Institutionalism
 The SAGE
Handbook of

Organizational
Institutionalism

Edited by
Royston Greenwood
Christine Oliver
Roy Suddaby
and Kerstin Sahlin

SAGE
Los Angeles • London • New Delhi • Singapore
© Sage Publications 2008

First published 2008

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 Contents

Notes on Contributors viii

Introduction 1
Royston Greenwood, Christine Oliver, Kerstin Sahlin and Roy Suddaby

SECTION I FOUNDATIONAL THEMES 47

1 Legitimacy in Organizational Institutionalism 49

David L. Deephouse and Mark Suchman

2 Isomorphism, Diffusion and Decoupling 78

Eva Boxenbaum and Stefan Jonsson

3 Institutional Logics 99
Patricia H. Thornton and William Ocasio

4 Organizational Fields: Past, Present and Future 130

Melissa Wooten and Andrew J. Hoffman

SECTION II INSTITUTIONAL DYNAMICS 149

5 The Work of Meanings in Institutional Processes and Thinking 151

Tammar B. Zilber

6 Power, Institutions and Organizations 170

Thomas B. Lawrence

7 Institutional Entrepreneurship 198

Cynthia Hardy and Steve Maguire

8 Circulating Ideas: Imitation, Translation and Editing 218

Kerstin Sahlin and Linda Wedlin

9 Organizational Implications of Institutional Pluralism 243

Matthew S. Kraatz and Emily S. Block
vi CONTENTS

10 Microfoundations of Institutional Theory 276

Walter W. Powell and Jeannette A. Colyvas

11 Institutions and Transnationalization 299

Marie-Laure Djelic and Sigrid Quack

SECTION III APPLICATIONS 325

12 Traditions as Institutionalized Practice: Implications

for Deinstitutionalization 327
M. Tina Dacin and Peter A. Dacin

13 New Forms as Settlements 352

Hayagreeva Rao and Martin Kenney

14 Social Movements and Failed Institutionalization:

Corporate (Non) Response to the AIDS Epidemic 371
Gerald F. Davis and Peter J.J. Anderson

15 Institutions and Corporate Governance 389

Peer C. Fiss

SECTION IV INTERFACES 411

16 Beyond Constraint: How Institutions Enable Identities 413

Mary Ann Glynn

17 Institutionalism and the Professions 431

Kevin T. Leicht and Mary L. Fennell

18 Institutionalism and Globalization Studies 449

Gili S. Drori

19 Organizational Institutionalism and Sociology: A Reflection 473

C.R. Hinings and Pamela S. Tolbert

20 Coalface Institutionalism 491

Stephen R. Barley

21 New Sociology of Knowledge: Historical Legacy and Contributions

to Current Debates in Institutional Research 519
Renate E. Meyer

22 Systems Theory, Societal Contexts, and Organizational Heterogeneity 539

Raimund Hasse and Georg Krücken

23 Charting Progress at the Nexus of Institutional Theory and Economics 560

Peter W. Roberts
 CONTENTS vii

24 Ecologists and Institutionalists: Friends or Foes? 573

Heather A. Haveman and Robert J. David

25 Networks and Institutions 596

Jason Owen-Smith and Walter W. Powell

26 Institutional-Level Learning: Learning as a Source of Institutional Change 624

Pamela Haunschild and David Chandler

27 Social Movements and Institutional Analysis 650

Marc Schneiberg and Michael Lounsbury

28 Examining ‘Institutionalization’: A Critical Theoretic Perspective 673

David J. Cooper, Mahmoud Ezzamel and Hugh Willmott

29 Taking Social Construction Seriously: Extending the Discursive

Approach in Institutional Theory 702
Nelson Phillips and Namrata Malhotra

30 Institutional Leadership: Past, Present and Future 721

Marvin Washington, Kimberly B. Boal and John N. Davis

SECTION V REFLECTIONS 737

31 Is the New Institutionalism a Theory? 739

Donald Palmer, Nicole Biggart and Brian Dick

32 How to Misuse Institutions and Get Away with It: Some Reflections
on Institutional Theory(ies) 769
Barbara Czarniawska

33 Been There, Done That, Moving On: Reflections on Institutional

Theory’s Continuing Evolution 783
Paul Hirsch

34 Reflections on Institutional Theories of Organizations 790

John W. Meyer

Index 813
 Notes on Contributors
Peter Anderson is a former doctoral student in management and organization at the Ross
School of Business at the University of Michigan. His research is focused on the relationship
between shared leadership and members’ perceptions of their value to an organization. He is
currently pursuing his Masters in Education to teach social studies at the secondary level.

Stephen R. Barley is Charles M. Pigott Professor of Management Science and Engineering,

Co-Director of the Center for Work, Technology and Organization at Stanford’s School of
Engineering and Co-Director of the Stanford/General Motors Collaborative Research
Laboratory. He has previously edited the Administrative Science Quarterly, and was founding
editor of the Stanford Social Innovation Review. He edited Between Craft and Science:
Technical Work in the United States (Cornell University Press, 1997), and recently published
(with Gideon Kunda) the book Gurus, Hired Guns and Warm Bodies: Itinerant Experts in the
Knowledge Economy (Princeton University Press).

Nicole Woolsey Biggart is Professor of Management and Sociology, and holds the Jerome J.
and Elsie Suran Chair in Technology Management at the University of California, Davis. She
is currently serving as Dean of the Graduate School of Management. Nicole is interested in the
institutional structure of economic relations and has studied the direct selling industry, family
firms and business groups in Asia, and microcredit lending. While her empirical interests have
been varied she has largely approached analysis from a Weberian institutional perspective and
grounds her work historically. She has also written extensively on institutional theory.

Emily Block is a Ph.D candidate at the University of Illinois at Champaign-Urbana. Her

research focuses on how organizations actively shape institutions and promote field-level
change. Her doctoral dissertation explores the process through which industry associations
and non-governmental organizations facilitate and direct the emergence of self-regulatory
governance institutions related to sustainable forestry practices.

Kimberly B. Boal is Rawls Professor of Management at the Rawls College of Business,

Texas Tech University. He was Co-Editor-in-Chief of the Journal of Management Inquiry
(1997–2006). He served on the Board of Governors of the Academy of Management from 2001
to 2004, and as President of the Western Academy of Management in 1998–2000. He was twice
awarded the Joan G. Dahl Presidential Award by the Western Academy of Management. His
research on worker attitudes and motivation, leadership, organizational change, strategic plan-
ning, mergers and acquisitions, and corporate social responsibility has been published in
Academy of Management Executive, Academy of Management Review, Administrative Science
Quarterly, Journal of Management, Leadership Quarterly, and Strategic Management Journal,
and books.

Eva Boxenbaum is Assistant Professor in the Department of Organization at Copenhagen

Business School, where she is also a member of the Centre for Management Studies of the
Building Process. The focus of her research is on the institutionalization of innovative management
practices, in particular, how management practices are translated, implemented, and sometimes
 NOTES ON CONTRIBUTORS ix

decoupled when they are brought into new national contexts. Her regional areas of expertise
are Canada, Denmark, France, Quebec and the United States. Most of her empirical work is
comparative in scope and spans multiple levels of analysis, the aim being to shed light on
processes of institutionalization. She has published in Strategic Organization, Journal of
Business Strategies, American Behavioral Scientist and in several international anthologies.

David Chandler is a Ph.D candidate in organization theory and strategy at the University
of Texas at Austin. His broad area of research interest lies at the intersection between the
organization and its institutional environment. Specifically, he is interested in change processes
of organizational adoption, learning, and imitation. He is also interested in the strategic impli-
cations of corporate social responsibility and firm/stakeholder relations. His publications in this
area include the textbook Strategic Corporate Social Responsibility (Sage, December 2005).

Jeannette A. Colyvas is an assistant professor in learning and organizational change at

Northwestern University's School of Education and Social Policy. Her research interests
include organizations and entrepreneurship, comparing public, private, and non-profit forms
of organizing, and institutional change. Colyvas' work examines the relationship between insti-
tutions and resources, practices and their meanings, and how social and technical categories
develop and become institutionalized. Her current research examines university–industry
interfaces, focusing on the translation of basic science into commercial application and its
ramifications for careers, identities, and public science.

David J. Cooper is the CGA Chair in Accounting at the University of Alberta and Director of
the Ph.D program for the School of Business. He has written or edited seven books and over
70 articles (in journals such as Accounting, Organizations and Society, Administrative Science
Quarterly, and Organization Studies). He is a joint editor of Critical Perspectives on
Accounting, and serves on the editorial boards of seven other journals. His current research
examines the development and implementation of strategic performance measurement
systems in multinational organizations, as well as the emerging systems of global regulation
of professional accountants.

Barbara Czarniawska holds a Chair in Management Studies at GRI, School of Business,

Economics and Law, Göteborg University, Sweden. Her recent publications in English are
A Tale of Three Cities (2002), Narratives in Social Science Research (2004) and A Theory
of Organizing (2008). She edited Global Ideas (with Guje Sevón, 2005), ANT and Organizing
(with Tor Hernes, 2005), Organization Theory (2006) and Management Education
& Humanities (with Pasquale Gagliardi, 2006).

Peter A. Dacin is Kraft Professor of Marketing at the Queen’s School of Business, Queen’s
University, Canada. His research areas include corporate reputation and identity, consumer judg-
ment formation, and sociological approaches to understanding communication and consumption.
He is currently working on several projects focused on understanding communication and coordi-
nation effects between marketing organizations and various types of consumption communities.
His work has been published in a variety of academic journals, including the Journal
of Marketing, Journal of Marketing Research, Journal of Consumer Research, Journal of the
Academy of Marketing Science, and the Journal of Business Research.

M. Tina Dacin is the E. Marie Shantz Professor of Strategy and Organizational Behavior in
the Queen’s School of Business, Queen’s University, Canada. Her research interests include
x NOTES ON CONTRIBUTORS

institutional change, organizational traditions, social entrepreneurship and partner selection in

alliances. She is currently working on several projects that examine the intersection between
culture and institutions. Her work has been published in the Academy of Management Journal,
Academy of Management Review, Accounting, Organizations, and Society, Journal of Management,
Journal of World Business, Organization Science, and the Strategic Management Journal.

Robert David (Ph.D, Cornell University) is Associate Professor of Strategy & Organization
and Cleghorn Faculty Scholar at the Desautels Faculty of Management of McGill University.
He is also Director of the Center for Strategy Studies in Organization at McGill. He studies the
evolution of industries and organizational forms from an institutional perspective. Robert has
published articles in Research Policy, Strategic Management Journal, Academy of
Management Journal, and Organization Science.

Gerald Davis is Wilbur K. Pierpont Collegiate Professor of Management at the Ross School
of Business and Professor of Sociology, the University of Michigan. His research examines the
influence of politics and social networks on the institutions of corporate governance and the
effects of financial globalization on social structure and politics. Recent books include
Organizations and Organizing: Rational, Natural, and Open System Perspectives (with
W. Richard Scott) and Social Movements and Organization Theory (co-edited with Doug
McAdam, W. Richard Scott, and Mayer Zald).

John N. Davis recently completed his Ph.D in leadership at Texas Tech University and is
currently on the faculty at Coastal Carolina University. In June 2008, he will move to the Kelley
College of Business at Hardin-Simmons University to become an assistant professor of manage-
ment. His research examines how leaders change over time, with special emphasis on charisma.

David Deephouse is an Associate Professor in the Department of Strategic Management and

Organization at the University of Alberta School of Business. He received his Ph.D from the
Carlson School of Management at the University of Minnesota. His research interests include
legitimacy, reputation, and organizational similarity, especially on the media’s role in them.

Brian Dick is a Ph.D candidate in the Department of Sociology at the University of California,
Davis. His research interests include social theory, the philosophy of the social sciences, organ-
ization studies, and science and technology studies. He is currently working on his dissertation,
which consists of a historical and sociological analysis of the proliferation of superstring theory
among physics departments. This work develops the concept of scientific legitimacy drawing
on ideas current in organization studies and science and technology studies.

Marie-Laure Djelic is Professor at ESSEC Business School, Paris. Her research interests
range from the role of professions and social networks in the transnational diffusion of rules
and practices to the historical transformation of national institutions. She is the author of
Exporting the American Model (Oxford University Press, 1998), which obtained the 2000 Max
Weber Award from the American Sociological Association. She has edited, together with Sigrid
Quack, Globalization and Institutions (Edward Elgar, 2003) and together with Kerstin
Sahlin-Andersson, Transnational Governance (Cambridge University Press, 2006).

Gili S. Drori is a lecturer in Stanford University’s International Relations Program and Director
of the IR Honors Program. Her research interests include the comparative study of science,
social progress and rationalization, globalization, and governance. Her interests on world
 NOTES ON CONTRIBUTORS xi

culture, global health, technology entrepreneurship, and higher education have appeared in her
books: Science in the Modern World Polity: Institutionalization and Globalization (2003,
co-authored with John W. Meyer, Francisco O. Ramirez and Evan Schofer), Global E-litism:
Digital Technology, Social Inequality, and Transnationality (2005), and World Society and the
Expansion of Formal Organization (2006, co-edited with John W. Meyer and Hokyu Hwang).

Mahmoud Ezzamel is Cardiff Professorial Fellow, Cardiff University. His main research
interests are in the areas of the interface between social theory and organization analysis, with
particular emphasis on accounting practice. He has published papers in Administrative Science
Quarterly, Academy of Management Journal, Accounting, Organizations and Society,
Organization Studies, Journal of Management Studies, Organization, as well as in other
leading accounting and management journals.

Mary L. Fennell is Professor and Chair of the Department of Sociology at Brown University.
She coauthored (with Richard Warnecke) the book The Diffusion of Medical Innovation:
An Applied Network Approach (Plenum, 1988). Her work has been published in Health
Affairs, Health Services Research, Administrative Science Quarterly, the Journal of Health and
Social Behavior, and the Academy of Management Journal. Her current research continues in
areas of nursing home quality of care differences (with Vince Mor), cultural competence in
nursing home care (with Melissa Clark), and studies of change over time in professional work,
professional labor markets, and professional organizations (with Kevin Leicht; Professional
Work, Blackwell 2001). She served Brown University as Dean of the Faculty from 2000 to
2004.

Peer C. Fiss is an assistant professor of strategy at the Marshall School of Business at the
University of Southern California. His current research interests include corporate governance,
framing and symbolic management, and the use of set-theoretic methods such as Qualitative
Comparative Analysis (QCA) in management and the social sciences. His articles have
appeared in journals such as the Administrative Science Quarterly, American Sociological
Review, Academy of Management Journal, Academy of Management Review, and the Strategic
Management Journal.

Mary Ann Glynn is Professor of Organization Studies, Professor of Sociology, and Fellow
and Research Director for the Winston Center for Leadership and Ethics at Boston College.
She is the nationally elected Program Officer for the Academy of Management, Managerial
and Organizational Cognition Division. Her research has been published in Academy of
Management Journal, Academy of Management Review, Organization Science, Strategic
Management Journal, Journal of Applied Psychology, Journal of Management Studies, Journal
of Marketing, and Poetics: International Journal of Empirical Research on Art, Media, and
Literature, and edited books.

Royston Greenwood (Ph.D, University of Birmingham, UK) is TELUS Professor of Strategic

Management in the Department of Strategic Management and Organization, School of
Business, University of Alberta. His research focuses upon the dynamics of institutional
change, especially at the field-level of analysis. His favored empirical settings involve profes-
sional service firms. Recently, his research has explored how and why large professional service
firms developed new organizational forms, with particular reference to how they are ‘theorized’
and thus legitimated. One paper from this research stream won the Academy of Management
Journal’s 2006 Best Paper Award. His work has appeared in Administrative Science Quarterly,
xii NOTES ON CONTRIBUTORS

Academy of Management Journal, Academy of Management Review, Organization Science, and

Organization Studies. He is a founding co-editor of Strategic Organization.

Cynthia Hardy is Professor of Management at the University of Melbourne and co-director

of the International Centre for Research on Organizational Discourse, Strategy & Change.
Her recent research includes a focus on institutional entrepreneurship and institutional change
from a discursive perspective, and has been published in Academy of Management Journal,
Academic of Management Review. She has also co-edited a special issue of Organization
Studies on institutional entrepreneurship. Other research interests revolve around the study
of power and politics in organizations, organizational discourse theory, and critical
discourse analysis. She has published Discourse Analysis: Investigating Processes of
Social Construction, as well as co-editing a special issue of Organization Studies on
organizational discourse and the Sage Handbook of Organizational Discourse. In total, she
has written over 60 journal articles and book chapters; and published twelve books and edited
volumes.

Raimund Hasse is associate professor for Sociology, Organization and Knowledge at the
University of Lucerne, Switzerland. His research interests include organization theory and new
institutionalism. His book Wohlfahrtspolitik und Globalisierung (2003) deals with the interplay
of organizational and political changes. Other publications have dealt with changes in
the organization of work, with organizational impacts of new technologies, and with issues
of innovation. Currently, Raimund Hasse is conducting a research project that investigates the
formation of new organizations.

Pamela Haunschild is the Herbert D. Kelleher/MCorp Professor of Business as well as

Chair of the Department of Management at the McCombs School of Business, University
of Texas-Austin. Her research involves studying organizational (and inter-organizational)
learning processes, especially how and under what circumstances organizations learn from
their errors. She is also interested in issues related to networks and corporate governance as
well as how governance decisions are affected by network information and influence. Her work
has been published in several key management journals, including Administrative Science
Quarterly, Organization Science, and Management Science.

Heather A. Haveman is Professor of Sociology and Organizational Behavior at the University

of California, Berkeley. Her research investigates organizations’ responses to shifting internal
and external conditions, the impact of organizational change on performance and survival, and
the consequences of organizational structures and dynamics for employees’ careers and the
composition of organizations’ work forces. She has published in Administrative Science
Quarterly, the American Sociological Review, the American Journal of Sociology, the Academy
of Management Journal, and Organization Science.

Bob Hinings is Professor Emeritus in the Department of Strategic Management and

Organization and Senior Research Fellow in the Center for Entrepreneurship and Family
Enterprise, School of Business, University of Alberta. He is currently carrying out research into
health care organization. He is also involved in research into the organization of the Canadian
wine industry. All of his research is concerned with organizational change.

Paul Hirsch is the Allen Professor of Strategy and Organization at Northwestern University’s
Kellogg School of Management. He has received the “Distinguished Scholar” award from the
 NOTES ON CONTRIBUTORS xiii

Academy of Management’s Division of Organization and Management Theory. He has also

served as Chair of this division, and on the boards of the American Sociological Association’s
Sections on Economic Sociology, and Organizations, Occupations and Work. His early study
of “Organizational Effectiveness and the Institutional Environment” helped expand the field’s
traditional focus on firms, to include industries and organizational fields, political economy and
regulation. He remains interested in the changes wrought by deregulation and similar insti-
tutional failures as the collapse of the Savings and Loan industry and, more recently, the large-
scale losses suffered by lenders and borrowers connected to the wide-spread failure of
subprime mortgage loans.

Andrew (Andy) Hoffman is Holcim (US) Professor of Sustainable Enterprise at the

University of Michigan. He has published five books and over fifty articles and book chapters
on environmental and social issues as they relate to business. He recently published the report
Getting Ahead of the Curve: Corporate Strategies that Address Climate Change with the Pew
Center on Global Climate Change. His book From Heresy to Dogma was awarded the 2001
Rachel Carson Prize. He serves on the editorial board of Organization & Environment. His
research deals with the nature and dynamics of change within institutional and cultural systems
and he applies that research towards understanding the cultural and managerial implications of
environmental protection and sustainability for industry.

Stefan Jonsson is currently a researcher at Uppsala University, Sweden. His research centers
on the interaction of norms, the spread of ideas and market structures. His earlier work centers
on norms that guide competitive behavior across firms and how these can lead to a systematic
undervaluation of the use of some new practices. More recently, he has focused on the role that
media plays in the structuring of markets and the spread of bad reputation.

Martin Kenney is a professor in the Department of Human and Community Development at

the University of California, Davis, and a senior project director at the Berkeley Roundtable on
the International Economy. He has been interested in the processes by which entrepreneurs
commercialize new technical developments, and through this process, enact new industries. Of
particular interest to him are the mechanisms by which regions develop institutions to support
entrepreneurial activity and the geography and dynamics of these support networks. His recent
research is in three areas: the evolution of the venture capital industry in the U.S. and globally,
the entrepreneurial support networks and genealogies of entrepreneurship in regions, and the
emergence of India as a leader in offshore service provision.

Matt Kraatz (Ph.D, Northwestern University) is an associate professor in the Department

of Business Administration at the University of Illinois. His scholarly interests include
organizational adaptation, governance, identity, leadership, and other institutional processes.
His research has been published in the Academy of Management Journal, the Strategic
Management Journal, Organization Science, and the American Sociological Review.

Georg Krücken (Ph.D, Bielefeld University, Germany) is professor of Science Organization,

Higher Education and Science Management at the German University of Administrative Sciences
in Speyer. After studying sociology, philosophy, and political sciences at Bielefeld University
and the University of Bologna, he worked as an associate professor at Bielefeld until 2006. From
1999 to 2001 he was a visiting scholar at the Department of Sociology at Stanford University.
He taught as a guest professor at the Institute for Science Studies, University of Vienna, and
at the Centre de Sociologie des Organisations, Sciences Po, Paris. His research interests include
xiv NOTES ON CONTRIBUTORS

science studies, organizational studies, the management of higher education, and neo-institutional
theory.

Thomas B. Lawrence (Ph.D, University of Alberta) is Weyerhaeuser Professor of Change

Management, and Director of the CMA Center for Strategic Change and Performance
Measurement at Simon Fraser University in Vancouver, Canada. After receiving his doctorate
in 1993 he was on the faculty of the University of Victoria until 2002. His research focuses on
the dynamics of power, change and institutions in organizations and organizational fields.

Kevin T. Leicht is Professor of Sociology, Director of the Social Science Research Center, and
co-Director of the Institute for Inequality Studies at The University of Iowa. He is editor of
Research in Social Stratification and Mobility. His research examines the relationship between
globalization and economic development, and their relationship to the production of social
inequality. His work has appeared in The American Sociological Review, American Journal of
Sociology, Social Forces, and The Academy of Management Journal.

Michael Lounsbury is Associate Professor of Strategic Management and Organization

at the University of Alberta School of Business and the National Institute of Nanotechnology.
His research focuses on the relationship between organizational and institutional change, entre-
preneurial dynamics, and the emergence of new industries and practices. He has published
research on topics such as social movement activism and the construction of the recycling
industry, and the professionalization of money managers in the mutual fund industry.
He is currently investigating the co-evolution of nanoscience and nanotechnology.
Professor Lounsbury serves on a number of editorial boards and his work has been published
in Administrative Science Quarterly, Academy of Management Journal, Academy of
Management Review, Strategic Management Journal, and Organization Studies. In addition, he
is the series editor of Research in the Sociology of Organizations, and co-editor in-chief of
Journal of Management Inquiry.

Steve Maguire is Associate Professor of Strategy and Organization in the Desautels Faculty
of Management at McGill University. His research focuses on institutional and technological
change resulting when commercial, scientific and political struggles intersect around social
or environmental issues. His doctoral dissertation draws lessons from society’s experience
with the insecticide DDT and was awarded the Academy of Management’s ‘Organization
and Natural Environment (ONE)’ Best Doctoral Dissertation Award in 2001. He has also
studied the pharmaceutical industry, analysing the impact of the empowerment of people
living with HIV/AIDS on the commercialization, availability and accessibility of HIV/AIDS
treatments.

Namrata Malhotra is on faculty in the Tanaka Business School, Imperial College, London,
UK. Her research is focused on understanding processes of organizational change, especially
in professional service organizations. She has been involved in projects investigating change
processes in Australian, British, and Canadian law firms. Currently, she is pursuing research
examining institutional change processes in law firms.

John W. Meyer is Professor of Sociology, emeritus, at Stanford. He has contributed to

organizational theory, comparative education, and the sociology of education, developing lines
of thought now called sociological institutional theory. Recently, he completed a collaborative
study of worldwide science and its impact on national societies (Drori, et al., Science in the
 NOTES ON CONTRIBUTORS xv

Modern World Polity, Stanford, 2003). Another collaborative project, on the impact of global-
ization on organizational structures, has just been published (Drori et al., eds., Globalization
and Organization, Oxford 2006). He now studies the rise and impact of the world human
rights regime, world curricula of mass and higher education, and the global expansion of higher
education.

Renate E. Meyer is Professor for Public Management at Wirtschaftsuniversität Wien, Austria.

Her research interests include the communicative construction of institutions and related framing
processes, the role of meaning in processes of institutional maintenance and change, and the
conceptualization of time. Her recent work addresses translations and alignments of global
management concepts to local opportunity structures, social identities, and the development
of communicative institutions. Renate is particularly interested in combining qualitative and
quantitative research. She is currently co-editing a volume on institutions and ideology.

William Ocasio is the John L. and Helen Kellogg Distinguished Professor of Management and
Organizations at the Kellogg Graduate School of Management, Northwestern University. His
research integrates institutional, cognitive, and political perspectives to explain organizational
decision making and organizational change. Current research projects include examining the
role of vocabularies of organizing in shaping decision making, and developing a political
capital perspective on power in organizations.

Christine Oliver is the Henry J. Knowles Chair of Organizational Strategy in the Schulich
School of Business at York University, Toronto. Her work has appeared in Administrative
Science Quarterly, Academy of Management Review, Organization Studies, Academy of
Management Journal, Advances in Strategic Management, Journal of Management Studies,
Strategic Management Journal, and American Sociological Review. Christine is on the
editorial board of the Journal of Management Studies, and is a past Representative-At-Large
on the Academy of Management Board of Governors. Christine is past Associate Editor
(1993–1996) and Editor (1996–2003) of the Administrative Science Quarterly.

Jason Owen-Smith is Assistant Professor of Sociology and Organizational Studies at the

University of Michigan in Ann Arbor. He is interested in institutional and organizational change,
innovation, the dynamics of complex social and economic networks and the commercialization
of academic research. His current project focuses on the intersection of science, technology,
and commerce in academe with particular emphasis on the ramifications of patenting,
licensing, and university–industry collaborations.

Donald Palmer is Professor of Organizational Behavior and Associate Dean for Research in
the Graduate School of Management at the University of California, Davis. He is also Editor
of Administrative Science Quarterly. He has conducted quantitative empirical studies on
corporate strategy, structure, and inter-organizational relations. And he is currently embarked
on a series of qualitative empirical studies of organizational wrongdoing, the first of which
appeared in Management Inquiry and the second of which is in press at Research in
Organizational Behavior.

Nelson Phillips is Professor of Strategy and Organizational Behaviour at Tanaka Business

School, Imperial College London. His research interests include knowledge management,
technology strategy, institutional theory, social entrepreneurship, management in cultural
industries, and international management. He has published over 60 academic articles and book
xvi NOTES ON CONTRIBUTORS

chapters, including articles in the Academy of Management Journal, Academy of Management

Review, Management Science, Sloan Management Review, Organization Science, Journal
of Management Studies, Journal of Business Ethics, and Organization Studies. He has also
written two books: one with Cynthia Hardy, Discourse Analysis (2002) and a second with
Stewart Clegg and David Courpasson, Power and Organizations (2006).

Walter W. Powell is professor of education and affiliated professor of sociology, organizational

behavior, management science and engineering, and communication at Stanford University.
He is also an external faculty member at the Santa Fe Institute. He works in the areas of organ-
ization theory, social networks, and economic sociology. He is particularly interested in the
processes through which knowledge is transferred across organizations, and the role
of networks in facilitating and hindering innovation processes. With Jeannette Colyvas, he is
studying the origins of organizational practices that eventually become codified and institution-
alized. With Hokyu Hwang, he is studying the consequences of increased professionalization
in the nonprofit sector, and its impact on civil society organizations. With Jason Owen-Smith,
he is studying the evolving network and institutional structures of the life sciences field and the
reshaping of the boundaries of public and private science.

Sigrid Quack is a research fellow at the Max Planck Institute for the Study of Societies in
Cologne. Her books include National Capitalisms, Global Competition and Economic
Performance, which she edited together with Glenn Morgan and Richard Whitley,
Globalization and Institutions, edited with Marie-Laure Djelic and Grenzüberschreitungen –
Grenzziehungen (Edition Sigma 2006, edited in German with Ariane Berthoin Antal). She has
also published articles in Cambridge Journal of Economics, Environment and Planning,
International Journal of Human Resource Management, Organization, Organization Studies
and Theory and Society.

Hayagreeva Rao is the Atholl McBean Professor of Organizational Behavior at the

Graduate School of Business, Stanford University. He studies the social and cultural causes
of organizational change.

Peter Roberts’ primary research interests relate to how the behavior and performance of
organizations evolve over time. He has studied these issues in diverse settings, including the
pharmaceutical industry, the retail banking industry, the hotel industry, and the global wine
industry. His research has been published in Academy of Management Review, American
Journal of Sociology, Journal of Economic Behavior and Organization, Organization Science,
and Strategic Management Journal. Peter has also served on the faculties of Columbia
University, Carnegie Mellon University, and the Australian Graduate School of Management.

Kerstin Sahlin is professor of management at Uppsala University. Her research interests

include transnational governance, transformed public-private relations, governance of health
care and universities, and the travels of management ideas. She recently edited Transnational
Governance: Institutional Dynamics of Regulation (Cambridge University Press, 2006, with
Marie-Laure Djelic) and The Expansion of Management Knowledge: Carriers, Flows and
Sources (Stanford University Press, 2002, with Lars Engwall). She is currently the Deputy
Vice-Chancellor of Uppsala University

Marc Schneiberg is the John C. Pock Professor of Sociology at Reed College. He researches
variety and change in economic organization, with particular emphasis on collective and public
alternatives to for-profit corporations in the American economy. He is currently completing an
 NOTES ON CONTRIBUTORS xvii

NSF-funded study of private, public, and cooperative enterprise. His research on alternatives,
organizational form, and social movements appears in Politics and Society, American Journal
of Sociology, American Sociological Review, Research in the Sociology of Organizations, and
Socio-Economic Review.

Mark Suchman is professor of Sociology at Brown University. His research interests center
on the relationship between law and organizations, particularly the role of legal institutions
in formally and informally legitimating innovation and entrepreneurship in the information
technology, nanotechnology, and healthcare sectors. In addition to his work on legitimacy,
he has also written on inter-organizational disputing, on the “internalization” of law within
corporate bureaucracies, and on contracts as social artifacts.

Roy Suddaby is an associate professor at the Alberta School of Business. His theoretical focus
is on processes of institutional change. His research has been published in Administrative
Science Quarterly, Academy of Management Journal, Journal of Organizational Behavior,
Accounting, Organizations and Society and Human Relations. Roy serves on the editorial
boards of Administrative Science Quarterly, Academy of Management Review, Academy of
Management Journal, Organization Studies, Journal of Management Studies and the
Scandinavian Journal of Management. He is currently studying corporate art collections.

Patricia H. Thornton is Associate Professor of Management at Duke University Fuqua School

of Business and Visiting Associate Professor at Stanford University Department of Sociology.
Her interests are in organization theory, economic sociology, and entrepreneurship. Her book
Markets from Culture: Institutional Logics and Organizational Decisions (2004) shows how
institutional logics influence executives’ discovery and development of market opportunities.
She has authored reviews of entrepreneurship literature in the Annual Review of Sociology and
the Handbook of Entrepreneurship Research. Currently, she is researching on how institutional
logics affect innovation discovery and the strategic decision to use network relations in
product development and distribution and also is comparing the long-term survival rates of
internal corporate ventures with ventures founded independently.

Pamela S. Tolbert is a professor and chair of the Department of Organizational Behavior

in the ILR School at Cornell University. Her research is broadly focused on processes
of organizational change, the role of organizations in social stratification, and the impact of
occupations on organizational structures. She has served on the editorial boards of
Administrative Science Quarterly, American Sociological Review, Organization Science,
Journal of Engineering and Technology Management and Sociological Forum, as the book
review editor for Administrative Science Quarterly, and as an associate editor for Management
Science and the Academy of Management Review.

Marvin Washington is an Associate Professor of Physical Education and Recreation with

a joint appointment with the Faculty of Business at the University of Alberta. His research
interest focuses on the creation and evolution of institutions and organizational fields. He has
recently examined the creation and evolution of U.S. collegiate athletics and this work has been
published in Academy of Management Journal, Organization Science, Organization Studies,
and Journal of Sport Management.

Linda Wedlin is assistant professor and lecturer at the Department of Business Studies,
Uppsala University. Her current research includes a project on transnational regulatory reform
in higher education and research, a study on local academic governance in practice, and a study
xviii NOTES ON CONTRIBUTORS

on the restructuring of interest representation in public rule-making. Recent publications

include a book, Ranking Business Schools (Edward Elgar, 2006), analyzing the role of ranking
practices, as new means of evaluation and monitoring, in the structuring of the international
management education field.

Hugh Willmott is Research Professor, Cardiff Business School. He has previously held full
professorial appointments at the Universities of Cambridge and Manchester and visiting
appointments at the Universities of Copenhagen, Lund and Cranfield. His books include
Making Quality Critical, The Re-engineering Revolution, Managing Knowledge, Management
Lives, Studying Management Critically and Fragmenting Work. He is interested in developing
critical analyses of diverse aspects of management and has published widely in social
science and management journals. He currently is a member of the editorial boards of the
Academy of Management Review, Organization Studies and Journal of Management Studies.
Further details can be found on his homepage: http://dspace.dial.pipex.com/town/close/hr22/
hcwhome.

Melissa Wooten is assistant professor in Sociology at the University of Massachusetts

Amherst. She received her doctorate in Management and Organization from the University of
Michigan in 2006. Her dissertation research focuses on change in historically black colleges
after the American Civil Rights Movement. She uses institutional theory to investigate the
processes leading to homogenization among historically black colleges, private Northeastern
liberal art colleges, and public universities located in the American South.

Tammar B. Zilber is a lecturer in Organization Theory at the School of Business

Administration, the Hebrew University of Jerusalem, Israel. She is interested in cultural worlds
within and without organizations. Using qualitative methods like ethnography, narrative analysis
and discourse analysis, she explores symbolic aspects of institutional processes. Among the
issues she examined in recent years were the translation of institutional meanings over time and
across social spheres; the role of stories in institutional entrepreneurship; and institutional
maintenance as narrative work.

Royston Greenwood, Christine Oliver, Kerstin Sahlin
and Roy Suddaby
The motivation for this Handbook arose from
a conversation with Don Palmer, who raised
the question of whether organization theories
in general have life cycles. Given the prolif-
eration of theoretical paradigms, do organi-
zation theories build into coherent
conceptual frameworks supported by dili-
gently conducted empirical work, or do they
fragment into proliferated confusion? That
conversation never proceeded to a compara-
tive assessment of organization theories. But
it did lead to the present volume. It seemed,
in late 2004, when the idea of a Handbook
was mooted, an appropriate moment to take
stock of the institutional perspective on
organizations because we were approaching
the thirtieth anniversary of seminal papers
that not only triggered revitalization of inter-
est in the role of institutions but became
known as the new institutionalism.
It is important at the outset to set down
certain scope conditions for this volume:
1. Our interest is in understanding organizations.
How and why do organizations behave as they
do, and with what consequences? These are the
overarching questions of organization theory.
‘Organizational institutionalism’ is the applica-
tion of the institutional perspective to those
questions.
Introduction
2. We focus upon ‘organizational institutionalism’.
Several variants of institutional analysis have
been identified. Hall and Taylor (1996) propose
three basic schools of thought: rational choice
institutionalism, historical (comparative) institu-
tionalism, and organizational (sociological)
institutionalism. The material covered in this
Handbook does centre upon organizational insti-
tutionalism, but we are less sure of the accuracy
of the depictions provided by Hall and Taylor
(1996) or Campbell (2004). In fact, we propose to
show how institutionalist research applied to
organizational behaviour has evolved over time
and that much of this work does not fit neatly
into the classifications offered by Hall or
Campbell. Our stance is not to ask, what is dis-
tinctive of ‘organizational institutionalism’? But,
instead: ‘What does the institutional perspective
tell us about organizational behaviour?’
3. Our timeframe emphasizes contributions made
since 1977. The late 1970s were great years for
organization theory. In a very short span of years,
at least three of the enduring perspectives within
organizational theory were initiated: resource
dependence theory, ecology theory, and institu-
tional theory. In 1977, two papers (Meyer &
Rowan, 1977; Zucker, 1977) introduced what
became known as new institutionalism. We do
not deny that institutions and institutional
processes had been examined prior to that date
(see Hirsch, Chapter 33 this volume). On the con-
trary, the study of institutions has a long and
2 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM

respected tradition (see DiMaggio & Powell,
1991; Hinings & Tolbert, Chapter 19 this volume;
and Barley, Chapter 20 this volume). However,
the body of institutional work post-1977 has a
focus that warrants our treatment of 1977 as a
starting point.
THE SOCIAL CONSTRUCTION OF
‘INSTITUTIONAL THEORY’
Institutional theory is perhaps the dominant
approach to understanding organizations. Its
popularity is shown in Figure 1.1, which
reports the number of citations to Meyer and
Rowan (1977). The steady rise in citations is
impressive. And it is clear from these statis-
tics that institutional theory is an entrenched
and prevalent approach. Moreover, as
Haveman and David (Chapter 24 this volume)
point out, institutional theory has dominated
submissions to the Organization and Manage-
ment Theory Division of the Academy of
Management.
But what is it? And why is it so popular?
What aspects of organizational behaviour
does it address? And how well does it do so?
In this section we review how the ‘so-called
institutional perspective’ (Carroll, Goodstein &
Gyenes, 1988: 238) has evolved since 1977.
By doing so we are, in one sense, retrospec-
tively tracing the social construction of insti-
tutional theory over the past three decades. We
review how the term has been used in the
main organization theory journals. We examine
how theorists and researchers have understood
the term and we uncover the organizational
issues and questions to which the theory has
been applied. We suggest certain pivotal
moments when either the definition or the
application of the theory shifted. Our motiva-
tion is to understand what makes an institu-
tional story different from other theoretical
perspectives. This is not an easy task given
institutional theory’s ‘definitional thicket’
(Zucker, 1987: 457). Moreover, any attempt
to arrange nearly 30 years of research and
theorizing can be challenged. Ours, we admit,
is a subjective arrangement and our procedure
means we may miss hidden nuggets.
Nevertheless, there are some reasonably obvi-
ous temporal signposts. Thus, we begin by
examining the period between 1977 and
1983, when several papers established the
foundations of the ‘new’ institutionalism.

300

250
Number of citations

200

150

100

50

0
78

80

82

84

86

88

90

92

94

96

98

00

02

04

06
19

19

19

19

19

19

19

19

19

19

19

20

20

20

20

Years
Meyer & Rowan DiMaggio & Powell Hannan & Freeman Pfeffer & Salancik

Figure 1.1 Citations to Meyer & Rowan (1977), DiMaggio & Powell (1983), Hannan & Freeman
(1977) and Pfeffer & Salancik (1978)
 INTRODUCTION
Foundations: 1977–83
The conceptual foundations of modern orga-
nizational institutionalism were established
in the works of Meyer and Rowan (1977),
Zucker (1977), Meyer and Rowan (1983),
DiMaggio and Powell (1983), Tolbert and
Zucker (1983), and Meyer and Scott (1983).
Collectively, these papers set the course for
much of the next three decades, although, as
we shall note, many of the works that fol-
lowed were sometimes selective in their
interpretations.
In the late 1970s, prevailing perspectives
within organization theory largely portrayed
organizations as agentic actors responding to
situational circumstances. Senior managers
steered organizations by interpreting their
contexts and taking appropriate actions.
Structural-contingency theory saw organiza-
tions adapting to circumstances of scale,
task uncertainty and strategic scope by appro-
priate selection of structural arrangements.
Resource-dependence theory analyzed how
organizations sought to affect the supply of
critical resources by managing their depend-
encies on other organizations (e.g. by careful
placement of directors). Even the behavioural
theory of the firm assumed adaptation to
market and performance circumstances,
albeit within the limits of bounded rationality.
Ecological theory was the exception, empha-
sizing the inability of organizations to be
adaptively managed, although even in this
case the problem was not that managers could
not effect organizational adaptation, but that
they could not do so quickly enough. Each of
these theoretical perspectives focused on the
relationship between an organization and its
environment and examined how organiza-
tions adapted – or attempted to adapt – so as
to secure an appropriate ‘fit’. The environ-
ment, moreover, was the ‘technical’/market
setting, much as assumed in accounts pro-
vided by economists, and the behaviour of
executives (organizations) was intendedly
(if boundedly) rational. It was against this
context that Meyer and Rowan’s (1977) cele-
brated paper appeared.
3
Following Weber, Meyer and Rowan were
interested in the rationalization and diffusion
of formal bureaucracies in modern society,
which they saw as arising from two condi-
tions: ‘the complexity of networks of social
organization and exchange’ and ‘the institu-
tional context’ (1977: 346). Most attention,
both in their paper and in subsequent work,
was given to the institutional context, but it is
worth remembering that ‘relational’ net-
works were seen as important influences.
Meyer (1977) and Scott (1983), for example,
anticipated that complex networks of
interactions between organizations would
increase the occurrence of rationalized
myths, that complex and conflicted fields
would give rise to a greater variety of organi-
zational forms, and that field complexity
would increase the likelihood of myths
becoming codified into formal regulations
and laws. Finally, they pointed out that
rationalized myths are diffused through rela-
tional networks. Networks/fields are thus
both antecedents of rationalized myths and
vehicles for their transmission (most clearly
set out by DiMaggio & Powell, 1983 – see
below).1
Nevertheless, the idea that captured the
imagination was that organizations are influ-
enced by their institutional context, i.e. by
widespread social understandings (rational-
ized myths) that define what it means to be
rational. Elsewhere, and less prosaically,
Meyer and Rowan (1983: 84) referred to the
institutional context as ‘the rules, norms, and
ideologies of the wider society’. Zucker (1983:
105) looked to ‘common understandings of
what is appropriate and, fundamentally, mean-
ingful behaviour’. And Scott (1983: 163)
offered ‘normative and cognitive belief sys-
tems’. The underlying focus of early institu-
tional theorists, in short, was the role of shared
meanings, institutional processes (such as
cultural prescriptions, Zucker, 1977) and insti-
tutional conformity.2
Because organizations are expected to
behave rationally, Meyer and Rowan pro-
posed that rationalized myths are accepted
as prescriptions of appropriate conduct.
4 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Organizations conform to them – i.e. become
isomorphic with their institutional context –
in order to signal their social fitness and gain
legitimacy in the eyes of critical constituen-
cies. It is by ‘appearing to be rational’ (Scott,
1983: 160) that organizations avoid social
censure, minimize demands for external
accountability, improve their chances of
securing necessary resources and raise their
probability of survival.
However, it was believed that conforming
to institutional rules might conflict with the
requirements of technical efficiency (Meyer
& Rowan, 1977: 310; Zucker, 1987: 445).
Therefore, conformity may be ceremonial,
‘a form of confidence game’ (Pfeffer, 1982:
246) producing ‘surface isomorphism’
(Zucker, 1987: 672). Ceremonial conformity
is achieved by deliberately decoupling sym-
bolic practices from the organization’s tech-
nical core. Decoupling occurs, in other
words, if the prescriptions of institutional
contexts are contradictory to the exigencies
of technical contexts. Ceremonial conformity
may also occur because institutional contexts
are often pluralistic and inconsistent (an
observation of some theoretical significance,
as will be shown later). The idea set out in the
1977 paper, that institutional prescriptions
run counter to efficiency considerations, was
qualified by Meyer and Scott (1983), who
referred to institutional and technical
exigencies as dimensions that can vary in
their relative salience within a given setting.
A more fundamental challenge would come
from Carroll, Lee and Rao, (1986; see also
Meyer, Scott & Strang, 1987; Zucker, 1987;
Powell, 1991) who pointed out that technical
contexts (e.g. markets) are themselves insti-
tutionally defined.
All organizations were envisaged as sub-
ject to institutional influences, but not to the
same extent. Organizations whose technolo-
gies are not clearly linked to given outcomes
and whose outputs are difficult to evaluate are
particularly sensitive to the need to appear
rational (Meyer & Rowan referred to them as
institutionalized organizations). Perhaps not
surprisingly, much early institutional work
equated institutionalized organizations with
the not-for-profit and governmental sectors,
precipitating a particular stream of research
(see below) that contrasted organizations in
highly institutionalized settings with those
where institutional influences were pre-
sumed to be much weaker. Later, institutional
ideas would be unapologetically applied
to all organizations, and technical con-
texts would be treated as institutional
constructions.
Given the originality of Meyer and
Rowan’s (1977) paper, it inevitably con-
tained underdeveloped themes and some
conceptual ambiguities. There was, for
example, no definition of ‘institution’.
Instead, the reader is left to assume that insti-
tutions are taken-for-granted rationalized
myths. Other definitions of ‘institution’
appeared early in the institutional literature,
with inevitable later confusion. One defini-
tion referred to institutions as types of organ-
izations, such as prisons, mental hospitals,
nursing homes, and orphanages. Another
definition referred to institutions as sectors
(see Hasse & Krücken, Chapter 22 this
volume), such as ‘education’, ‘büsiness’, and
‘armies’. A final definition echoed antecedent
work (e.g. Hirsch, 1975), equating institu-
tions with the major agencies of the political
economy (e.g. unions, the professions, regu-
latory agencies of the State). It is thus not
surprising that Haveman and David (Chapter
24 this volume) should challenge institution-
alists ‘to reach agreement on the meaning of
central constructs and wean themselves from
using the vapid term institution, which means
everything and therefore nothing’. (For a
contrary view, see Czarniawska, Chapter 32
this volume.).
Our purpose here is not to provide the or
even a definition of institution; rather, we are
interested in tracing how others defined it
over the past 30 years. Nevertheless, and for
the record, we understand the term to refer to
more-or-less taken-for-granted repetitive
social behaviour that is underpinned by nor-
mative systems and cognitive understandings
that give meaning to social exchange and
 INTRODUCTION
thus enable self-reproducing social order.
Institutions are characterized by lack of overt
enforcement, their survival resting upon ‘rel-
atively self-activating social processes’
(Jepperson, 1991: 145; see also Zucker,
1977). Although institutions exist at the level
of the individual (e.g. a handshake in western
societies), the organization (e.g. the use of
formal accounting controls, particular struc-
tures, and impersonal personnel practices),
the field (e.g. hierarchies of status between
categories of occupations or between organi-
zations that affect hiring patterns and
alliances), or society (e.g. a legal system
based upon due process), organizational
institutionalism is primarily interested in
institutions and institutional processes at the
level of the organization and the organiza-
tional field (although not exclusively – see,
for example, Djelic & Quack, Chapter 11;
Drori, Chapter18; and J. Meyer, Chapter 34
this volume).
Meyer and Rowan also omitted to provide a
formal definition of ‘institutional context’,
other than that it contains rationalized myths.
Tolbert (1985: 2) followed suit: ‘widespread
social conceptions of appropriate organiza-
tional form and behaviour constitute the insti-
tutional environment of organizations’. As we
note below, over the next two decades ‘institu-
tional context’ would continue to prove a trou-
blesome concept, partly because the term was
used to cover two very different ideas – con-
text as symbolic/cultural influences (as in the
Tolbert quote), and context as the regulatory
framework of state and professional agencies
(e.g. Scott & Meyer, 1983). The latter
approach is closer to that of institutional econ-
omists than to our reading of Meyer and
Rowan (1977). To us, accounts of how regu-
latory agencies (institutions) shape organiza-
tional behaviour are incomplete institutional
explanations unless they show how regulatory
frameworks embody, enact or transmit societal
norms and values. Otherwise, referring to reg-
ulatory frameworks as ‘the institutional con-
text’ risks confusing institutional theory with
resource-dependence or political-economy
explanations.3
5
‘Institutionalization’ and ‘institutional-
ized’ were defined by Meyer and Rowan.
Institutionalization is the process by which
‘social processes, obligations, or actualities
come to take on a rule-like status in social
thought and action’ (Meyer & Rowan, 1977:
341). Something is ‘institutionalized’ when it
has that rule-like status. In a famous turn of
phrase, Zucker concluded that institutional-
ization means that ‘alternatives may be liter-
ally unthinkable’ (1983: 5). Tolbert and
Zucker (1983: 25) suggested three indicators
of institutionalized practices: they are widely
followed, without debate, and exhibit
permanence.
The notion of institutionalized behaviour
as something widely practiced and taken-
for-granted, however, was not entirely unam-
biguous. On the one hand, Meyer and Rowan
referred to ‘binding’ and ‘powerful institu-
tional rules’ that are ‘in some measure
beyond the discretion of any individual par-
ticipant or organization’ (1977: 344).
Similarly, Tolbert and Zucker (1983: 22)
referred to organizations as ‘captives of the
institutional environment in which they
exist’. In this imagery, institutions are ‘envi-
ronments’ that are ‘out there’ and to which
organizations respond (Zucker, 1987).
Zucker (1977), in a perceptive and rigorous
application of Berger and Luckman’s (1967)
ideas, insisted that ideas and practices are
institutionalized when they have achieved the
attributes of exteriority and objectivity. As
such (and this is a distinctive feature of
Zucker’s account), institutionalized acts
require no monitoring or enforcement but
persist solely through transmission from one
generation to another.
Yet, on the other hand, notions of ceremo-
nial adoption and decoupling imply foresight
and choice. Even more striking are state-
ments that ‘organizations … often play active
roles in shaping [institutional] contexts’ and
that ‘powerful organizations attempt to build
their goals and procedures directly into soci-
ety as institutional rules’ (Meyer & Rowan,
1977: 29–30). Similarly, when Meyer and
Rowan advise that in highly institutionalized
6 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
contexts managers need to exercise ‘saga-
cious conformity’ if they are to understand
‘changing fashions and governmental pro-
grammes’, they imply a level of active man-
agement as organizations adapt to their
institutional environments. Rao and Kenney’s
examination (Chapter 13 this volume) of
new forms as settlements is a compelling
illustration of this active management as an
antecedent to institutionalization. This recip-
rocal tension between institutions as cultur-
ally hegemonic (with organizations ‘bound’
by taken-for-granted rationalizations) and
institutions as enacted and reconstructed
(with organizations responding ‘strategically’
to institutional pressures) is a ‘long-standing
tension’ (Hinings & Tolbert, Chapter 19 this
volume) within sociology and thus, not sur-
prisingly, would become a central theme in
institutional thinking.
In outline, then, the basic elements of the
institutional thesis put forward in the late
1970s and early 1980s were as follows:
1. organizations are influenced by their institutional
and network contexts.The institutional context con-
sists of rationalized myths of appropriate conduct;
2. institutional pressures affect all organizations but
especially those with unclear technologies and/or
difficult to evaluate outputs. Organizations
especially sensitive to institutional contexts are
institutionalized organizations;
3. organizations become isomorphic with their
institutional context in order to secure social
approval (legitimacy), which provides survival
benefits;
4. because conformity to institutional pressures
may be contrary to the dictates of efficiency,
conformity may be ceremonial, whereby symbolic
structures are decoupled from an organization’s
technical core;
5. institutionalized practices are typically taken-for
granted, widely accepted and resistant to
change.
These elements awaited empirical verifi-
cation.
The above summary contains no statement
that organizations converge upon the same
response to their institutional environments.
That idea arose from DiMaggio and Powell
(1983), who began from the same motivation
as Meyer and Rowan, namely, to understand
the rationalization of modern society. But
DiMaggio and Powell reframed this question
into: ‘why is there such startling homogene-
ity of organizational forms and practices?’
(1983: 147). The answer, they proposed,
resides in the structuration of organizational
fields. As fields mature, ‘there is an inexorable
push towards homogenization’ as ‘powerful
forces emerge that lead them (organizations)
to become more similar to one another’ (1983:
148). Homogenization, point out DiMaggio
and Powell, is field or sector-specific,
although this does not preclude ideas diffus-
ing across sectors because fields have their
own histories and institutional processes.
Boxenbaum and Jonsson (Chapter 2 this
volume) suggest that DiMaggio and Powell’s
emphasis upon field-level structuration
processes was a nuanced advance from the
initial institutional statements, because it
‘represented a move towards a more cogni-
tive and constitutive view of organizations’.
However, DiMaggio and Powell’s framing of
the problem was often misinterpreted by later
researchers, who treated homogeneity as
synonymous with institutional isomorphism,
when in fact homogeneity is only one possi-
ble effect of institutional pressures and one
that is not, in our view, a definitional one.4
We elaborate upon this point later.
The most cited contribution of the 1983
paper was its discussion of how institutional-
ization actually occurs. DiMaggio and
Powell proposed three ‘mechanisms of diffu-
sion’: coercive, which occur when external
constituents – typically powerful organiza-
tions, including the State – cajole or force
organizations to adopt an organizational ele-
ment; normative, which arise primarily from
professionalization projects; and mimetic,
which occur when uncertain organizations
copy others either because others’ actions are
believed to be rational and/or because of a
desire to avoid appearing deviant or back-
ward. These mechanisms of diffusion are
usefully considered as explaining the
 INTRODUCTION
motivation for adoption. Coercive isomor-
phism occurs because organizations are
motivated to avoid sanctions available to
organizations on which they are dependent.
Normative isomorphism occurs because
organizations are motivated to respect social
obligations. And mimetic isomorphism
occurs because organizations are motivated
by their interpretation of others’ successful
behaviours.5 As Mizruchi and Fein (1999)
and Boxenbaum and Jonsson (Chapter 2 this
volume) note, most empirical studies have
been portrayed (often erroneously) as studies
of mimetic isomorphism, although, as we
note momentarily, this is not necessarily
indicative of institutional processes. Hasse
and Krücken, (Chapter 22 this volume)
return to European scholars – such as
Luhman and Giddens – who inspired early
institutional theorists, in order to show how
institutional theory could overcome simpli-
fied notions of homogeneity and instead
develop better explanations of heterogeneity
and variation.
One insight in the DiMaggio and Powell
paper that was much less influential was the
connection between institutional processes and
‘the influence of elite interests’ (1983: 147).
This insight was largely inspired by Bordieu’s
notion of fields (e.g. Mohr, 1998). The same
theme is evident in Tolbert and Zucker (1983),
and would be raised again by DiMaggio
(1988). However, attention to the political
consequences of institutional processes would
be largely lost in subsequent institutional
work (and in much of organization theory in
general – see Stern & Barley, 1996; Perrow,
2002; Hinings & Greenwood, 2002).
To take stock. By 1983 the initial founda-
tions of organizational institutionalism had
been established. Two features are worth
emphasizing because they are defining
themes of our subject matter:
1. the central question addressed by early formula-
tions of institutional theory was: Why and with
what consequences do organizations use partic-
ular organizational arrangements that defy tradi-
tional rational explanations? As we will show,
this question was initially interpreted somewhat
7
narrowly whereas later work embraced a widen-
ing array of issues and concerns. Thus, the initial
line of inquiry looked at the adoption of the
bureaucratic organizational form within a given
sector or field (i.e. at the process of rationaliza-
tion), whereas later inquiries looked at a wider
range of organizational forms, practices and
behaviours, and at the construction of the field
itself. But the central focus is the organization
and its relationship with its context.
2. the essential answer provided by institutional
theory emphasized (and still emphasizes) the
play of widely-shared and taken-for-granted
social values and ideas. As Meyer and Rowan
(1977: 346) famously put it: ‘institutional theo-
ries in their extreme forms define organizations
as dramatic enactments of the rationalized myths
pervading modern societies’. Critically, the insti-
tutional explanation is not derived from the cal-
culated self-interest of organizational actors, nor
from the imperatives of instrumental functional-
ity. Instead, the institutional explanation empha-
sizes that organizations seek legitimacy and
survival not efficiency, and highlights the role of
cognition and obligation, not self-interest.
Early years: 1983–91
Immediately following publication, most
citations to Meyer and Rowan (1977) and
Zucker (1977) were incidental rather than
substantive. Authors simply acknowledged
that social values affect organizations and/or
that organizations adopt structures in order to
legitimize themselves.6 Often, these ideas
were juxtaposed against those of structural
contingency theory. Few attempts were made
to actually test institutional ideas and, over-
all, Meyer and Rowan’s influence was rather
modest.7 North American reviews of organi-
zation theory that appeared in the early to
mid 1980s gave sparse attention to institu-
tional work (e.g. Van de Ven & Joyce, 1981;
Zey-Ferrell, 1981; Astley & Van de Ven,
1983; Galaskiewicz, 1985). The very term
‘institutional’ was not established. Fligstein,
for example, referred to ‘organiza-
tional homogeneity theory’ (1985: 377).
Galaskiewicz (1985) wrote of the literature
‘on legitimation’. Only Scott (1981) and
8 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Pfeffer (1982) were sufficiently prescient to
seriously acknowledge the institutional
perspective.
Outside of North America, Meyer and
Rowan’s ideas caught the interest of Swedish
scholars who showed especial interest in the
notion of decoupling (e.g. Brunsson, 1985,
1989). Public sector reforms were observed
to be primarily rhetorical in form and the
goal of ‘modernization’ was found to have
little effect upon operational practices. These
empirical observations confirmed the Meyer
and Rowan thesis of decoupling. But
Scandinavian researchers also recognized
that organizations confront and handle multi-
ple and contradictory institutions and expec-
tations. Brunsson (1989), in particular,
theorized on ‘organizational hypocrisy’
whereby organizations ‘talk’ in one way yet
act in another in order to cope with contra-
dictory contextual pressures. Scandinavian
research also discerned what would later
be referred to as the ‘translation’ process
(see Boxenbaum & Johnsson, Chapter 2;
Czarniawska, Chapter 32; and Sahlin &
Wedlin, Chapter 8 this volume). Despite these
emerging themes, the impact of Scandinavian
research upon North American thinking was
initially rather slight.
Gradually, the institutional thesis received
fuller treatment and was ‘confronted with
data’ (Scott, 2004: 464). But very quickly,
studies claiming to be within the institutional
perspective showed a diversity of approaches
and a rather casual use of the term institu-
tional. We begin, however, with four sets of
studies that clearly reflected the idea of insti-
tutions as rationalized myths. The first set
(which we label processual) demonstrated
that organizations are motivated to achieve
legitimacy by adopting practices widely
believed to be rational. The second (cross-
category) examined the proposition that
institutionalized organizations converge
around practices assumed to be rational.
The third (cross-national) compared prac-
tices in different countries, testing whether
distinct cultural values result in different
organizational behaviours. The fourth
(means of transmission) explored how ideas
are transmitted across organizations.
Processual studies
The most systematic and nuanced approach to
the institutional literature was initiated by
Tolbert & Zucker (1983) who looked at the
diffusion of civil service employment prac-
tices across US local governments over an
extended period. Adoption reflected incorpo-
ration of practices ‘modelled after the business
corporation, where personnel selection
and promotion were presumably based on
merit …’ (Tolbert & Zucker, 1983: 25).
A point worth emphasizing is that Tolbert and
Zucker explicitly identified the ‘rationalized
myth’ – business efficiency via hiring based
on expertise – to which municipalities were
responding. The logic of Tolbert and Zucker’s
study is that diffusion involves two stages,
each defined by the motivation for adoption.
Early adopters of an idea are motivated to
improve operations, ‘for example, by stream-
lining procedures or reducing conflict’
(Tolbert & Zucker, 1983: 26), whereas later
adopters are motivated to secure social legiti-
macy by appearing ‘modern, efficient and
rational’ even though the procedures were not
especially functional. Tolbert and Zucker
interpret the second stage of diffusion to
mean that, as increasing numbers of organiza-
tions adopt an innovation, the innovation itself
becomes ‘progressively institutionalized, or
widely understood to be a necessary compo-
nent of rationalized organizational structure.
The legitimacy of the procedures themselves
serves as the impetus for the later adopters’
(1983: 35). An important insight, here, is that
it is the justification underlying adoption that
signals whether an institutional effect is being
observed. (Tolbert & Zucker did not actually
measure whether late adopters were moti-
vated by legitimacy concerns, or whether they
secured it. They concluded that, because the
functional imperatives that explained early
adoptions did not explain later adoptions,
institutional processes must have been at
work. This is treating institutional theory as
the default option).
 INTRODUCTION
The Tolbert and Zucker study was pivotal,
for three reasons. It was the first large-scale,
quantitative, historical analysis of institu-
tional effects. It focused upon cognitive
forms of legitimacy. And it set in train a
series of studies seeking to confirm the two-
stage model of diffusion. This model was
largely but by no means always found in
other studies, but is often treated as one of
the basic insights of institutional theory.
Zilber (Chapter 5 this volume), however,
raises the important caution that, by focusing
upon the diffusion of structures rather than
upon underlying motivations, there is a
high risk that erroneous conclusions will
be drawn.
A second diffusion study with a historical
perspective9 was conducted by Fligstein
(1987). Fligstein showed that the back-
grounds of those holding top positions in
large corporations changed over the course of
60 years. From 1919 to 1939, manufacturing
personnel dominated but thereafter were
increasingly displaced, first by sales and
marketing personnel and from 1959 onwards
by finance personnel. Manufacturing person-
nel dominated initially because firms were
largely non-diversified. But the emergence of
the multidivisional form led to the rise of the
sales and marketing function because that
function was believed to have the appropriate
skill set for the new strategy. Then, anti-trust
legislation, which curtailed opportunities for
vertical and horizontal diversification, pro-
vided the conditions for unrelated diversifi-
cation to emerge as the dominant strategy
and the ascendance of finance officers.
Fligstein’s analysis is thus a broad one, but it
contains a mimetic explanation of diffusion:
‘once new actors established themselves in
one set of firms, their counterparts in other
firms were able to use that fact as a basis of
gaining power’ (1985: 56).
Three features of Fligstein’s study deserve
recognition. First, he links control of the
organization to intra-organizational power
struggles. Second, he never uses the terms
‘rationalized myths’ or ‘legitimacy’, but
his study traces how generally accepted
9
(legitimated) ideas (myths) within an organi-
zational field are associated with adoption of
particular organizational strategies and struc-
tures. Third, Fligstein is not addressing the
Weberian question of why society is becom-
ing increasingly rationalized. Fligstein dis-
connected the study of institutional processes
from the study of rationalization. Thereafter,
the study of institutional processes was free
to examine any aspect of organizational
form. Finally, Fligstein offers an alternative
to the two-stage model of change, showing
how disruptive changes in legal frameworks
enable shifts in organizational behaviours by
altering patterns of incentives and opportuni-
ties (see also Baron et al., 1986; Edelman,
1990, 1992). This model of change, the
exogenous-shock model, became the domi-
nant portrayal for the next two decades
(see below).
Cross-category comparisons
A series of studies, mostly from researchers
from Stanford University (Pfeffer & Cohen,
1984; Tolbert, 1985; Baron & Bielby, 1986;
Fennell & Alexander, 1987; Pfeffer & Davis-
Blake, 1987; Eisenhardt, 1988) examined
Meyer and Rowan’s (1977) idea that govern-
ment and non-profit organizations were more
likely than commercial organizations to use
employment practices presumed (by the
researchers) to be exemplary practices. By
and large, these studies supported the idea
that not-for-profit organizations are espe-
cially sensitive to institutional influences.
A different observation was made by Baron,
Jennings and Dobbin (1988), who tracked
the diffusion of modern personnel from man-
ufacturing industries to service industries
(i.e. from a setting low in institutional sensi-
tivity to one with high institutional sensitiv-
ity). Baron et al. explained their findings by
saying that once practices were extensively
used in manufacturing they became the stan-
dard of good practice. Another extension of
cross-category research was provided by
Sheets and Ting (1988) who showed that dif-
fusion even within a category of institution-
alized organizations is dependent not only
10 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
upon the need for legitimacy, but upon
whether organizations are within networks
that ‘transmit normatively expected employ-
ment practices’ (610). These cross-category
studies were discontinued by the end of the
decade.
Cross-national comparisons
A third approach hypothesized that social
values in different countries (especially those
that are relatively cohesive and isolated, such
as Japan), would use different organizational
practices (for a review, see Lincoln &
McBride, 1987). This approach directly chal-
lenged the structural-contingency assump-
tion of culture-free ‘laws’ of organizations.
Lincoln et al. (1981) compared the attitudes
of Japanese and US workers in 28 Japanese-
owned organizations located in the United
States. They found that the two groups of
employees preferred different organizational
arrangements. Organizations with ‘inappro-
priate’ structures, i.e. that did not reflect
employee preferences, experienced employee
dissatisfaction. Lincoln et al.’s study was the
first in a series of studies through the 1980s
that analyzed the effects of national culture
(e.g. Birnbaum & Wong, 1985; Lincoln et al.,
1986; Carroll et al., 1988; Hamilton &
Biggart, 1988). Evidence of cultural (institu-
tional) effects was usually found, but see
Birnbaum and Wong (1985).
Means of transmission
Showing the spread of practices per se does
not explain how institutional influences pen-
etrate organizations, a question that began to
be addressed late in the 1980s (and even
more in the 1990s). Several means or agents
of diffusion were observed, including
professional networks (Baron et al., 1986;
Sheets & Ting, 1988), government agencies
(Baron et al., 1986), management consultants
(Ghoshal, 1988) and senior executives
(Harrison, 1987). Each of these means of dif-
fusion would be extensively examined in the
1990s. But one thesis not picked up was
Lincoln et al.’s (1981) idea that structures are
adopted because of employee expectations of
appropriate structures. Yet, in some ways,
this explanation is the closest to the ideas of
Meyer and Rowan.
Other themes
Other themes were explored but to a lesser
extent. Pfeffer and Davis-Blake (1987), in a
rare study of consequences, examined how
stereotypes of ‘women’s work’ and its worth
results in patterns of compensation that
disadvantage women. Torres (1988) showed
how professions shape regulatory structures
so as to preclude organizational forms
inconsistent with their interests. Imershein
and Rond (1989), in a strangely neglected
paper, traced how competing societal values –
‘altruism’ and ‘efficiency’ – precipitated
struggles between interest groups who
promote different organizational forms
and how state regulators resolved these
disputes.
Not all studies were entirely supportive of
the institutional argument (see for example,
Pfeffer & Cohen, 1984; DiPrete, 1987; Finlay,
1987; Oliver, 1988). But most were. Moreover,
evidence was collected from an array of prac-
tices, including personnel procedures (Tolbert
& Zucker, 1983), boundary-spanning strate-
gies (Fennell & Alexander, 1987), corporate
committee structures (Harrison, 1987) and
accounting practices (Covaleski et al., 1986).
Furthermore, evidence was taken from a range
of settings, including universities (Pfeffer &
Davis-Blake [add 1987]), hospitals (Fennell
& Alexander, 1987), school districts (Strang,
1987), publicly traded corporations (Baron
et al., 1986), municipalities (Tolbert &
Zucker, 1983), the long-shore industry
(Finlay, 1987), Hungarian agricultural co-
operatives (Carroll et al., 1988), US federal
bureaucracies (DiPrete, 1987), social welfare
agencies (Oliver, 1988), and even the funeral
industry (Torres, 1988). The sheer range and
diversity of practices and settings was
impressive, leading Zucker (1987: 443) to
comment that: ‘institutional theories have
spread rapidly, a testimony to the power of
the imaginative ideas developed in theoreti-
cal and empirical work’.
 INTRODUCTION
One reason for the expanding scope and
diversity of institutional ideas was their suc-
cessful juxtaposition with other theoretical
perspectives. Initially, institutional accounts
were largely contrasted with structural-
contingency theory because of that theory’s
assumption of efficiency as the key dynamic
driving organizational behaviour. But, later,
institutional approaches were linked, often in
a complementary way10 to resource depend-
ence and population ecology (for a review of
the 1980s, see Singh & Lumsden, 1990). Not
all observers were impressed by these
theoretical overlaps (Zucker, 1989, 1991,
pp. 104–5). Nevertheless, insights achieved
by combining institutional and ecological
analysis (see Haveman & David, Chapter 24
this volume) and resource dependence theory
continue to be productive.
Taking stock: 1987–91
By the end of the 1980s, ambiguities in the
institutional story were becoming apparent,
as were issues that were not receiving ade-
quate attention (Perrow, 1986; Neilson &
Rao, 1987; Scott, 1987; Zucker, 1987, 1988;
DiMaggio, 1988; Fligstein & Dauber, 1989;
Oliver, 1991; Powell & DiMaggio, 1991).
One concern was that the majority of studies
had been of the public sector and not-for-
profit organizations. Meyer and Rowan’s def-
inition of ‘institutionalized organizations’ as
those with weak market forces had naturally
turned attention to governmental and not-for-
profit organizations. Towards the end of the
decade, however, this overly narrow under-
standing of where institutional processes
would occur was being discarded as scholars
recognized that ‘markets’ were institutions.
We pointed out above that the first authors to
make this point were Carroll et al. (1986) but
Zucker (1987) and Powell (1991) strength-
ened the call for examination of all types of
organizations.11
A second ambiguity surrounded the
concept of isomorphism. We noted earlier
that several studies reported that not all
11
organizations respond in similar fashion to
institutional processes. Given this finding,
Fombrun (1989: 439) rightly asked: ‘If
isomorphism obtains, how then are we
to explain the apparent variety of organiza-
tions that nonetheless co-exist within indus-
tries …?’ This question, we believe, points to
the confusion raised earlier over the idea of
isomorphism. As initially proposed, isomor-
phism refers to the relationship between an
organization and its institutional context.
But, isomorphism was (and still is, unfortu-
nately) often taken to mean that all organiza-
tions will respond in the same way. Yet,
organizations confront institutional contexts
containing multiple and inconsistent myths
that allow for multiple yet equally legitimate
responses (a feature explicitly recognized by
Meyer & Rowan, 1977: 356 and by Scott,
1983: 161). By the late 1980s, increasing
references were being made to the ‘substan-
tial discord’ within institutional environ-
ments rather than the ‘effortless evolution of
common sense understandings’ implicit in
earlier work (DiMaggio, 1991: 268; see also
Imershein & Rond, 1989; Baxter & Lambert,
1990). Further, it was recognized that
‘institutionalized myths differ in [their]
completeness’ (Meyer & Rowan, 1977: 354),
providing scope for strategic choice in how
they are interpreted (Scott, 1991). Finally,
Fligstein (1985) had shown that complex
organizations constitute arenas of struggle
where groups compete for power and selec-
tively appeal to institutional pressures to
legitimate their claims. For all these reasons,
the idea that organizations would become
aligned with their institutional contexts in the
same way became less acceptable.
Even if the institutional context is very
clear and uniform in its demands, it is not
clear that diffusion of any practice per se sig-
nifies an institutional effect. If a firm believes
another to have superior knowledge and to
have acted rationally, copying that firm is
an act of vicarious learning, and, arguably,
a purposely ‘rational’ decision. In contrast, if
a firm adopts an innovation because it
believes that doing so provides legitimacy,
12 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
that behaviour is an institutional effect.
(Several leading researchers – see Haveman
& David, Chapter 24 this volume, for
example – view legitimacy as a defining
element of institutional explanations).
Convergence around a similar set of prac-
tices, in other words, could signal competi-
tive or institutional isomorphism12 (see
Haunschild & Chandler, Chapter 26 this
volume, for an elaboration of this argument).
But few diffusion studies conducted in the
1980s made this distinction (neither did those
conducted in the following decade). Instead,
‘institutionalization’ became associated with
diffusion irrespective of the (unexamined)
motivations for adoption. Moreover, it was
assumed (wrongly) that a lack of conver-
gence indicates the absence of institutional
processes.
A third ambiguity concerned the nature of
an institutional explanation. We illustrate this
ambiguity by summarizing an excellent
paper (Baron et al., 1986) that used ‘institu-
tional’ in a rather different way to that put
forward by the core foundational papers.
Baron et al. set out to ‘sketch an institutional
explanation’ (1986: 352) of the spread of
modern personnel administration in the US
during and after World War II. The explana-
tion provided is that new personnel methods
were adopted when ‘certain institutional pres-
sures’ favoured adoption. What were these
‘institutional pressures’? During World War
II, there was increased federal intervention in
labour markets, especially through the War
Production Board and the War Labour Board.
These agencies sought to stabilize employ-
ment and reduce turnover in industries criti-
cal to the War effort by encouraging firms to
adopt particular employment practices.
Moreover, the War Manpower Commission
placed responsibilities upon firms for provid-
ing data on their manpower needs, which led
to increased use of job analysis and job eval-
uation. In effect, federal agencies were pro-
viding ‘models for personnel management’
(1986: 371) underwritten by ‘strong incen-
tives’ (1986: 373). These models included the
creation of personnel departments and the
hiring of expert staff, and use of personnel
practices of a bureaucratic form. (Here we
see, again, the academic interest in rationali-
zation). After the War, personnel practitioners
shifted their focus and claimed (successfully)
that they had expertise relevant to the
immediate post-War problems of labour-
management relations such as productiv-
ity measurement. Moreover, personnel
officers mobilized themselves and began
their professionalization ‘project’ (Abbott,
1988).
Baron et al.’s paper is a rich story of insti-
tutional processes, embracing mimetic, coer-
cive and normative mechanisms. But we
wish to highlight that it uses ‘institution’ in
two ways. On the one hand, institutions are
‘models’ that become cultural prescriptions.
As such, institution is being used in the same
way as it was by Meyer and Rowan (1977).
On the other hand, institutions are the regula-
tory agencies of the political economy. In this
second usage the institutional context is not
one of ideas and symbols but of agencies and
policies. By the end of the 1980s, Baron
et al. thus illustrate how the term institution
had acquired two meanings: as rationalized
myths within a cultural context; and as a
framework of (primarily State) regulatory
agencies and policies. The former is the
focus of Meyer and Rowan (1977). The latter
would become the focus of the confusingly
termed ‘new institutionalism’ (see, for exam-
ple, Ingram & Inman, 1996; Ingram & Clay,
2000; Ingram & Silverman, 2002). But, this
latter form of ‘institutional explanation’ need
not (and in some later studies, did not)
explicitly embrace socio-cultural elements.
Instead, institutions would be defined,
simply, as the regulatory framework. The dif-
ficulty with this usage is that it fails to
separate an institutional from a resource-
dependence perspective. For us, inclusion of
regulatory frameworks as ‘institutions’ is
appropriate only if it is made clear that those
institutions embody taken-for-granted socie-
tal norms and values, and if these values are
explicitly identified. This distinction between
institutions as cultural prescriptions, and
 INTRODUCTION
institutions as regulatory frameworks, would
recur over the next decade and beyond.
A fourth ambiguity concerned the basic
questions that institutional theory seeks to
answer. The foundational papers ask why
there is an increasing rationalization of soci-
ety and use of bureaucratic organizational
forms. But organization theorists are (more?)
interested in institutionalized patterns of
behaviour, irrespective of whether those
practices are indicators of rationalization. We
referred earlier to Fligstein’s (1985) tracking
of the use of the multidivisional form, which
is an interesting question to organization the-
orists. But it is not an application of the
Weberian question of increasing rationaliza-
tion. The multidivisional form (M-form) is
no more an indicator of rationalization than
is, say, the functional form that the M-form
displaced, or the network form that followed.
This turning away from Weber’s (and Meyer
& Rowan’s and DiMaggio & Powell’s) focus
upon rationalization would be increasingly
characteristic in the 1990s and would
serve to expand the scope of institutional
applications.
New directions?
DiMaggio (1988) complained that institu-
tional work risked being marginalized unless
it could incorporate ‘the reality of purposive,
interest-driven, and conflictual behaviour’
(1988: 5). Organizations, he rightly com-
plained, were portrayed as caught within the
constraints of institutionalized norms.
Consequently, institutional theory could not
explain fundamental change. To progress,
DiMaggio argued, institutional theory would
have to incorporate an account of agency and
address a series of critical questions: How are
new organizational forms created and legiti-
mated? Who has the power to legitimate a
novel form? Who are the ‘institutional entre-
preneurs’? How are ‘core institutions’ dele-
gitimized? Building on DiMaggio (1988),
Oliver (1991) incorporated resource-depend-
ence theory and suggested that organiza-
tional responses to their institutional
environment may be proactive or even
13
‘strategic’, depending on various contingen-
cies in the organization and its environment.
Oliver’s analysis identified possible strategic
responses and the likely antecedents of their
adoption.
Paradoxically, others believed that much
institutional work held an oversimplified
approach to agency. Neilson and Rao (1987)
criticized existing work for: ‘treating legiti-
macy as something to be managed in a func-
tional sense by dominant coalitions. This
creates the serious risk of oversimplifying
legitimacy into a matter of marketing and
effective presentation rather than approach-
ing it as a complex process of socially con-
structing reality’ (1987: 525).13 (This
observation, curiously, is particularly appro-
priate today.) A key difference between these
different standpoints is that Neilson and Rao
were criticizing images of agency carried out
within an existing institutional setting,
whereas DiMaggio was interested in how
that setting might be changed. For us, both
criticisms had merit. Nevertheless, it was
widely assumed at the beginning of the
1990s that institutional theory did not take
sufficient account of how actors (i.e. organi-
zations) were able to work on their institu-
tional context in order to promote their
interests. This imagery, however, increas-
ingly sees institutional contexts as ‘out
there’, as constraints on an organization,
rather than as something with which the
organization interacts and thus constructs.
Another proposed new direction, put for-
ward by Powell (1991), concerned the conse-
quences of institutional behaviour. A core
assumption of the institutional story is that if
organizations conform to institutionalized
norms, they gain legitimacy and improve
their survival prospects. But few studies in
the 1980s, other than those adopting the eco-
logical perspective, examined whether con-
formity did generate legitimacy, and, if so,
with whom; nor did they examine whether
legitimacy led to organizational survival.
One exception was Singh et al. (1986), who
observed that endorsement by external agen-
cies (an indicator of legitimacy) reduced the
14 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
liabilities of newness of social service organ-
izations. Little attention was also given to the
broader political consequences of institu-
tional structures, even though, as we noted
earlier, the connection between institutional
processes and elite interests was raised in
several of the original formulations. This gap
in research (exceptions included Baron et al.,
1986; Imershein & Rond, 1989; Baxter &
Lambert, 1990) prompted DiMaggio and
Powell (1991: 30) to lament that ‘power and
interests have been slighted topics in institu-
tional analysis’.
There was, however, growing awareness
towards the end of the 1980s that organizations
are not unitary entities and that their responses
to institutional processes may be less homoge-
neous and less automatic than originally envis-
aged (e.g. Fligstein, 1985, 1987; Hinings &
Greenwood, 1988). Looking back, Powell
commented that: ‘… much of the imagery of
institutional theory portrays organizations too
passively and depicts environments as overly
constraining. There is a wide range of institu-
tional influences, and internal responses to
these pressures are more varied than is sug-
gested by our initial arguments.’ (1991: 194;
see also, DiMaggio, 1991).
In summary, as the decade turned institu-
tional theory was clearly established within
organization theory as a productive lens
through which to understand organization-
context interactions. But if the promise of
institutional theory was to be realized there
was a need to show the underlying motiva-
tions of institutional effects (rather than treat
them as the default option), to pay greater
attention to (and explain) the variability of
responses to conflicting institutional pres-
sures, to incorporate more agentic and politi-
cal dimensions, and to explicitly look at how
institutions arise, change and with what con-
sequences. Did this happen?
Expanding horizons: 1991–2007
Most textbooks that appeared after 1991 would
include some (albeit limited) discussion of the
institutional perspective. For example,
Richard Daft’s best-selling organization
theory textbook referred to institutional
theory for the first time in the sixth edition,
published in 1997. Admittedly, most text-
books referred to institutional theory more as
an interesting aside than as a core construct,
but by the middle of the decade the perspec-
tive was firmly established as one of the cen-
tral approaches of organization theory (see
for example, Aldrich, 1999). Moreover, in
terms of research, the 1990s was a theoreti-
cally rich period with an expanding agenda
of applications and greater systematization
of ideas. Initially, there was a focus on show-
ing isomorphism and its dynamics. But, by
the middle of the decade, attention had turned
to the examination of legitimacy, typically
accompanied by a more agentic approach.
A further line of research examined institu-
tional change, again often with an agentic
approach (as indicated by adoption of ‘insti-
tutional entrepreneurship’ as a central organ-
izing term). Finally, there was a renewed
interest in the notion of ‘institutional logics’,
which represented a welcome return to the
importance of cultural symbols. In other
words, several of the challenges raised at the
end of the 1980s were being addressed, but,
as we shall see, not all of them.
Before reviewing these research themes, it
is worth noting that the concept of institution
continued to be troublesome and used in sev-
eral different ways. As before, some
researchers referred to cultural models,
others to the State or its policies, some
simply avoided the term and pointed instead
to presumed institutional effects (e.g.
mimetic behaviour). Godard (1999: 683),
rather politely, thought the theory had
become ‘increasingly amorphous’. Davis
et al. (1994: 550), in similarly diplomatic
tones, found the meaning of institution
‘somewhat unclear’. Scott’s (1995: xiv) mas-
terful review noted that ‘institution’ had
acquired new meanings ‘much like barnacles
on a ship’s hull’. For most theorists, however,
the problem was put aside. Much like the early
days of organization theory, when a tacit
 INTRODUCTION
agreement occurred to stop attempting to
define ‘organization’, there emerged an
unwritten assumption that we intuitively
know what we mean by institution and thus
have no further need to define it.
Scott (1995) brought order to the various
strands of institutional analysis by distin-
guishing between the regulative, normative
and cultural-cognitive ‘pillars’ or elements
that underpin institutions. Analytically, these
are separate elements and have been selec-
tively emphasized by different theorists. One
consequence has been the crystallization of
the two nascent approaches of the 1980s
(institutions as cultural models, institutions
as regulatory frameworks), and, worryingly,
an increasing disconnect between them. In
practice, as Scott later acknowledged, the
three pillars are often found together but the
cultural-cognitive pillar provides ‘the deeper
foundations of institutional forms … the infra-
structure on which not only beliefs, but norms
and rules rest’ (Scott, 2004: 5). For this reason,
Phillips and Malhotra (Chapter 29 this
volume) would prefer that researchers focus
exclusively upon the cultural-cognitive,
which they declare as the distinctive insight
of organizational institutionalism. Scott,
however, urges researchers to specify which
pillars are operant in which settings, how
they unfold, and with what effects. Few
researchers, however, have satisfactorily
operationalized the three pillars (Mizruchi &
Fein, 1999) and in some instances (e.g.
Kostova & Roth, 2002) they are deliberately
blended to form a composite ‘institutional
profile’. Nevertheless, Scott’s pillars have
become one of the most-cited contributions
in the institutional literature.
The notion of ‘institutionalized’ was less
troublesome, typically interpreted to mean
something that is widely used and more or
less taken-for-granted. Davis et al. (1994),
following Zucker (1977), offered a useful but
tough definition, proposing that a practice or
belief is institutionalized if it is widely
accepted without recourse to analysis as the
best way of meeting technical requirements,
and, ‘is able to withstand challenges based
15
on instrumental grounds’ (Davis et al. 1994:
551). This latter condition, however, is rarely
insisted upon in empirical work (although,
see Brunsson, 2006). Instead, institutional-
ization has become accepted as the process
whereby things become institutionalized,
which, in turn, simply means that things are
more or less taken for granted.14
Institutional isomorphism
Studies of isomorphism were salient in the
early to mid 1990s and elaborated upon
the processual and transmission studies of
the previous decade. The two-stage model
was examined, with mixed results. Despite
this inconsistent support, the model began to
be treated as having ‘canonical status’
(Schneiberg & Lounsbury, Chapter 27 this
volume). However, research in the 1990s
increasingly recognized that institutional
contexts were complex, often consisting of
competing institutional demands (see
Boxenbaum & Jonsson, Chapter 2; Hasse &
Krücken, Chapter 22; and Kraatz & Block,
Chapter 9 this volume). There was thus
growing interest in why and how organiza-
tions interpret and respond differently to
their contexts.
Three approaches developed to explain
why organizations in general are more or less
receptive to institutional pressures. The dom-
inant approach was structural and examined
how institutional prescriptions are mediated
by an organization’s position in a social (net-
work) structure, with position defined by the
degree of centrality, status, or simply by ties
to other organizations. Where you are, in this
approach, determines what you do. Interest
was shown in which organizations serve as
models for others to copy, and in the means
by which information and/or expectations are
transmitted. Board interlocks, ‘perhaps the
most-studied social structure in organization
theory’ (Davis & Greve, 1997: 12), were
extensively examined. (A smaller number of
studies examined the role of spatial proxim-
ity but recognition of the role of geographic
communities became rather lost and has only
recently resurfaced).
16 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
An intriguing twist was provided by
Westphal and Zajac (2001) who observed that
network ties are not only conveyers of institu-
tional pressures but conduits for knowledge
of how to avoid them. Another interesting
study (Davis & Greve, 1997) compared the
diffusion of two practices – the poison pill,
and golden parachutes for CEOs – and found
that, although both practices diffused, they
did so in very different ways. One diffused
rapidly, the other more slowly. One diffused
in linear form, the other in the classic S-curve.
Further, the dynamics driving diffusion were
also different. This study, in other words,
highlighted the complexities of diffusion
(which were thrown into relief by the com-
parative method) and considered the social
processes whereby practices are actively jus-
tified to particular constituencies. Both stud-
ies noted that organizations can act upon their
institutional contexts (see also Davis &
Anderson, Chapter 14 this volume).
Although we are including the diffusion
studies of the early and mid 1990s as part of
the institutional story, these studies would
often combine institutional with organiza-
tional learning theory or network theory –
Young, Charns & Shortell (2001) actually
referred to the ‘network/institutional per-
spective’ – and it was not always clear
whether the authors’ focal interest was diffu-
sion or isomorphism. Few studies, moreover,
went beyond rates of adoption as indicative
of whether practices had become established
and taken-for-granted, even though, as Rao
et al. point out, ‘adoption is sometimes fol-
lowed by regret and abandonment’ (2001:
503). Nevertheless, the diffusion of pre-
sumed institutional effects began to be
treated as evidence of institutional processes,
even though the motivation and meanings
underlying adoption were not established,
and even though it was rarely established that
adoption was permanent (‘internalized’, to
use Kostova & Roth’s term, 2002). Zilber
(Chapter 5, this volume) attributes the neg-
lect of meaning and process to the preference
for quantitative, macro-level methodologies
rather than more interpretive, qualitative
approaches. R. Meyer (Chapter 21, this
volume) adds that US dominated institutional
theory lost contact with some of its European
theoretical ‘forefathers’.
A second approach to understanding orga-
nizational responses to institutional pres-
sures looked at intraorganizational factors.
Greenwood and Hinings (1993) emphasized
that organizations are coalitions of diverse
professional interests that contest which of
several institutional models (archetypes)
should be adopted. Han (1994) identified the
importance of status, observing that high and
low status firms are less likely than interme-
diate status firms to engage in mimetic
behaviour. Kossek et al. (1994) demonstrated
the effects of demographics and gender in
shaping organizational responses. Beck and
Walgenbach (2005) turned attention to more
traditional contingency variables, such as
organizational size (which increases the like-
lihood of adoption) and technology (cus-
tomization decreases adoption). These and
similar studies confirmed that organizations
are unlikely to respond uniformly to institu-
tional processes, although the ‘choice-set’
(Greenwood & Hinings, 2006) of options is
institutionally defined.
Towards the end of the 1990s, a third
approach, as yet not fully developed, turned
attention to notions of organizational iden-
tity. How organizations respond to their con-
texts is affected by how far institutional
pressures are consistent with the history and
broader norms that define an organization to
its members (Elsbach & Kramer, 1996; Fox-
Wolfgramm et al., 1998; Labianca et al.,
2001; Kostova & Roth, 2002). The relation-
ship between institutional processes and
organizational identity is complex and recip-
rocal (see Glynn, Chapter 16 this volume)
with institutionalized social categories and
symbols providing the materials from which
a claimed identity is constructed (who we
are is defined by whom we profess to be
like) and by which identity is displayed.
Organizational identity, in other words,
mediates how organizations interpret and
respond to institutional expectations.15
 INTRODUCTION
Implicit in the above three approaches, to
a greater or lesser degree, was the idea that
institutional models or prescriptions are ‘out
there’. This assumption is clearest in the
structural approach to diffusion, which basi-
cally tested whether a particular structural
form or technique was adopted or not. A very
different imagery, referred to earlier, is pro-
vided by the Scandinavian school, which
emphasizes the diffusion of ideas through a
process of ‘translation’ (see Czarniawska,
Chapter 32 and Sahlin & Wedlin, Chapter 8
this volume). Instead of treating institution-
ally prescribed structures and practices as
‘out there’ and as adopted more or less ‘as
is’, translation assumes that ideas and prac-
tices are interpreted and reformulated during
the process of adoption. Several studies in
this tradition focused on the interplay of
translated ideas and transformed organiza-
tional identities (Sahlin-Andersson, 1996;
Sevón, 1996; Hedmo et al., 2006; Wedlin,
2006). Inevitably, translation implies deliber-
ate and accidental or unintended transforma-
tions of ideas as they transfer from one
setting to another, and the potential for con-
tinuous adjustment and change, much as
anticipated in Giddens’ notion of structura-
tion. The Scandinavian approach was thus
more faithful to the social constructionist
principles of institutional thought. Early
Scandinavian contributions had been rela-
tively ignored, but pivotal statements by
Czarniawska and Sevón (1996) and Sahlin-
Andersson (1996) generated increased atten-
tion in North America.16 These works
observed that imitators are often motivated to
become similar to other organizations and
yet seek to distinguish themselves.
Studies of diffusion and translation clearly
allowed for agentic action. Organizations
were no longer presented as conforming to
institutional demands, but as making sense of
them, adapting them, enacting them, and
working upon them (e.g, Glynn, Chapter 16
this volume). This is a very different image to
that conveyed at the beginning of the decade,
indicating that DiMaggio’s call for inclusion
of agency and interest, a call amplified in the
17
mid 1990s (e.g. Scott, 1995; Christensen,
Karnoe, Pedersen & Dobbin, 1997; Hirsch &
Lounsbury, 1997; Stinchcombe, 1997), was
being answered. Research in the 1990s had
turned decidedly agentic and remained so,
perhaps too much so, into the 2000s.17
Legitimacy
If the motivating question of the 1980s had
been ‘Why is there such startling homogene-
ity of organizational forms and practices?’
(DiMaggio & Powell, 1983: 147), one of the
two motivating questions from the mid 1990s
became ‘How do organizations acquire,
manage and use legitimacy?’ (the second
was, How do institutional arrangements
change? – see below). We attribute this shift
in attention, at least partly, to the growing
acceptance that neither institutional contexts
nor organizations are homogeneous. But it
may also have been a response to the ampli-
fied appeal for inclusion of interests and
agency. For example, one approach drew
upon impression management theory to show
how organizations acquired and sustained
social approval (e.g. Elsbach & Sutton, 1992;
Elsbach, 1994; Arndt & Bigelow, 2000).
A rather different and interesting example of
agentic behaviour is Westphal and Zajac’s
(2001) study of why some organizations that
announce stock repurchase plans (announce-
ments favourably received by investors) fail
to implement them (with the result that CEOs
retain discretion over the allocation of corpo-
rate resources). According to Westphal and
Zajac, the decoupling of announcements
from implementation was especially likely in
corporations with powerful CEOs. In other
words, ‘powerful actors mediate institutional
effects’ (2001: 207; see also Zajac &
Westphal, 2004). Again, we see the recogni-
tion of agency and the role of interests in how
organizations respond to institutional pres-
sures. (More recently, we see ‘embedded
agency’ featured as a core characteristic of
institutional logics – see Thornton & Ocasio,
Chapter 3 this volume.)
Renewed interest in legitimacy went hand
in hand with two developments. First, there
18 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
were attempts to give greater precision to
what the term means. Suchman’s (1995)
classic statement distinguished between
pragmatic, moral, and cognitive legitimacy,
and identified the various audiences who
confer it. Aldrich and Fiol (1994) separated
sociopolitical from cognitive legitimacy.
Ruef and Scott (1998: 877) and Scott
et al. (2000) crystallized (and in our view
raised the standard of the research bar) by
declaring the need to specify much more
clearly which organizational elements are
affected by institutional processes, which
audiences confer legitimacy, and what form
of legitimacy is being conferred. Interestingly,
most studies that followed would point to
external audiences, such as the media and
professional associations; only a minority
noted the role of internal audiences (e.g.
Staw & Epstein, 2000; Pollock & Rindova,
2003). The important point is that greater
specificity was being introduced (see
Deephouse & Suchman, Chapter 1 this
volume).
Interest in legitimacy also led to a call for
better empirical measures. Zucker (1989)
had questioned the use of density (the
number of organizations with a particular
arrangement) and called for better proxies of
cognitive legitimacy. In the mid 1990s, this
argument flared into a spirited debate
between Baum and Powell (1995) and
Hannan and Carroll (1995) with the former
advocating use of richer and multiple meas-
ures, such as certification contests, creden-
tialing mechanisms, training programmes,
and so forth. Despite these attempts to obtain
greater conceptual precision and more credi-
ble empirical indicators, Foreman and
Whetten would later complain that ‘there is
little agreement on how it (legitimacy) is
defined and/or measured’ (2002: 623).
Deephouse and Suchman (Chapter 1) reaf-
firm this complaint, but also note, encourag-
ingly, that efforts are being made to use
richer empirical indicators, such as media
statements, certification and licensing,
endorsements, and links to prestigious
organizations.
Only a minority of studies during this
period explicitly examined whether conform-
ity to cultural prescriptions delivered social
legitimacy and/or improved organizational
survival chances and/or affected performance
in other ways. Early in the 1990s, studies that
examined the consequences of conformity
largely concluded that legitimacy did,
indeed, follow conformity, but were less
clear on whether performance was affected.
Later, several studies connected legitimacy
positively with performance (see Deephouse
& Suchman, Chapter 1). Higgins and Gulati
(2003), for example, provided an insightful
account of how legitimacy affects the ability
of young firms to attract prestigious invest-
ment banks as lead underwriters for initial
public offerings. Arthur (2003; see also
Deeds, Mang & Frandsen, 2004) showed that
legitimacy gained from adoption of work-
family human resource initiatives affected a
company’s share price. Zimmerman and
Zeitz (2002) traced how legitimacy enabled
new ventures to grow by assisting their
acquisition of resources. In sharp contrast,
Kitchener’s (2002: 411) study of academic
health centres in the US revealed that ‘uncrit-
ical adoption of managerial innovations can
prove to be more malignant than benign in
their implications’ and Denrell (2003) pro-
vided a theoretical explanation for why
mimetic behaviour will result in poorer per-
formance. A rather different take on the role
of legitimacy was provided by Sherer and
Lee (2002), who note that high legitimacy
enables organizations to deviate from estab-
lished practices. Overall, these results
demonstrate the complexity of the relation-
ship between legitimacy and performance.
Institutional entrepreneurship and change
DiMaggio’s (1988) challenge that institu-
tional theory should provide an account of
deinstitutionalization and institutional
change was met by a flurry of work. A piv-
otal expression was the Special Issue of the
Academy of Management Journal (Dacin,
Goldstein & Scott, 2002). Later, institutional
entrepreneurship emerged as a key term and
 INTRODUCTION
became almost synonymous with institu-
tional change. In fact, from the later 1990s
the focus of institutional change was the con-
struction and legitimation of new practices
(see Hardy & Maguire, Chapter 7 this
volume). Such was the appeal of this pro-
posed research agenda that understanding
institutional entrepreneurship became a cot-
tage industry from about 2000 and indicates,
again, the currently strong agentic emphasis
within institutional work. Organizations
became treated as the independent rather
than the dependent variable in processes of
institutional change.
An important early study of institutional
change focused upon the organizational field.
Leblebici, Salancik, Copay and King (1991)
took account of the variety of actors typically
embraced within the definition of field
(actors too often neglected in later studies
that claimed to be field-level analyses) and
provided an insightful account of how inter-
actions between them evolved within the US
radio broadcasting industry from its incep-
tion in the early 1900s to the mid 1960s. The
paper explicitly addressed the conundrum of
agency, asking how actors can reflect upon
and change institutionalized practices in
which they are embedded. Leblebici and his
colleagues provided four important contribu-
tions, three of which shaped the trajectory of
subsequent research. First, they explicitly
theorized at the level of the organization
field, which became the level for institutional
analysis (see Wooten & Hoffman, Chapter 4
this volume). Second, they argued that the
locus of change within a field is likely to be
‘fringe’ or peripheral actors because these
organizations are less embedded within, and
less privileged by, existing institutional
arrangements.18 Third, they emphasized the
importance of ‘internal contradictions’
(Leblebici et al., 1991: 337) that emerge as
fields develop, thus providing the starting
point for an endogenous explanation of
change, an idea that remained largely ignored
until it was revisited by Seo and Creed
(2002). Finally, Leblebici et al. (1991)
noted how new technologies invoke use of
19
analogies, i.e. existing cognitive frameworks
are used to make sense of ambiguous or
novel events. Few studies have replicated
this theme.
In contradiction to Leblebici et al.’s idea of
endogenously driven change, most North
American19 studies followed the assumption
of the 1980s that institutional change is trig-
gered by an exogenous shock or ‘jolt’
(Meyer, 1982), whereby change happens as a
consequence of external factors ‘smacking
into stable institutional arrangements and
creating indeterminancy’ (Clemens & Cook,
1999: 447). The exogenous shock model
retains the image of highly institutionalized
settings exhibiting stability and relative iner-
tia over long periods. Gradually, however,
institutional fields came to be seen as more
conflicted and pregnant with suppressed
interests (see Hasse & Krücken, Chapter 22,
and Wooten & Hoffman, Chapter 4 this
volume). And, as the 1990s ended, the exoge-
nous model was revitalized by the inclusion
of social movement theory (see Davis &
Anderson, Chapter 14; Schneiberg &
Lounsbury, Chapter 27; and Rao & Kenney,
Chapter 13 this volume). Social movement
theory not only provides a language for
understanding how radically new ideas are
framed and theorized in order to further their
acceptance, but assumes explicit contestation
between actors whose interests are disadvan-
taged and repressed. All of these depictions
contrasted sharply with the portrayals of the
1980s. Instead of institutional settings being
seen as highly stable, permanent and charac-
terized by conformity, they were now treated
as contested terrains contoured by variation,
struggles and relatively temporary truces (or
‘settlements’, Rao & Kenney in Chapter 13).
This new imagery raised the profile of power
relations (see Lawrence, Chapter 6 and
R. Meyer, Chapter 21 this volume).
One worry about the attention given to
political struggles is that the institutional
dimension sometimes recedes into the back-
ground. A critical contribution of institu-
tional analysis is its recognition that actors
are not motivated solely by self-interest.
20 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Yet, at times, studies that analyze the strate-
gies used by actors/entrepreneurs to achieve
institutional change often ignore how and
why institutional forces shape the strategies
accepted as appropriate and the choice of
strategies made by particular actors. Unless
political processes are explicitly couched
within an institutional context, the resultant
story becomes premised upon actors behav-
ing quasi-rationally and knowingly pursuing
their interests. For us, this would be a politi-
cal or resource dependence account, not an
institutional one.
A very different and important approach to
institutional change followed the definition
of institution as the apparatus and policies of
the State (Edelman, 1990, 1992; Dobbin,
1992, 1993; Edelman, Abraham & Erlanger,
1992; Dobbin, Sutton, Meyer & Scott, 1993;
Edelman, Erlanger & Lande, 1993; Dobbin
& Dowd, 1997, 2000; Edelman & Suchman,
1997; Edelman, Uggen & Erlanger, 1999).
A sub-emphasis within this perspective was
the relationship between organizations and
the law. There is much to admire in these
papers. One theme is that laws and regula-
tions create and/or enhance interests. Dobbin
(1992), for example, showed how legislation
encouraged development of the private insur-
ance industry. Edelman (1992) linked legisla-
tion on ‘due practice’ to the evolution of the
personnel profession. Once established,
these interests/agencies make it difficult to
reverse public policy (a point initially made
by Baron et al., 1986). Another theme is that
professionals interpret public policy and
develop responses that, after legal testing in
the courts, diffuse across the profession. In
this way, organizational responses converge
and become reproduced through professional
networks and enforced by the mechanisms of
professional discipline. Interpretations of,
and responses to, public policy are in part
constituted by the implicit models embedded
within the legal system (e.g. conceptions of
fair treatment, due process, etc.). Such
interpretations resonate with legal institu-
tions such as the Courts, enhancing their
acceptance and thus legitimation. Further,
personnel professionals theorize responses in
ways that persuade managers to see the poli-
cies not as onerous ‘red-tape’, but as technical
ways of improving efficiency (for example,
by securing a better fit between employee
skills and job requirements). Theorizing com-
pliance in this way achieves two things. It
enhances the value and status of the personnel
profession (by reinforcing their interests); and,
it links compliance to perceived efficiency,
giving it the status of ‘rational’ behaviour.
Through these processes, in other words, prac-
tices become rationalized myths.
Four features of the above studies deserve
highlighting. First, they offer a rich account
of the dynamics of change. They show how
legislation creates interests (e.g. the profes-
sions, or new industries) which construct
compliance behaviours. They show how pro-
fessions use legislation to enhance their
influence and scope of activity. They look at
the role of power both within and between
organizations and industries. Second, these
studies began to show that legislation is not
simply a structure of incentives and opportu-
nities but a reflection of cognitive schema
that are historically contingent. As Edelman
and Suchman (1997: 482) put it, ‘organiza-
tions instrumentally invoke or evade the law’
and ‘look to the law for normative and cog-
nitive guidance, as they seek their place in a
socially constructed cultural reality’. As
such, these studies began to combine the two
definitions of institutions (i.e. institutions as
regulatory frameworks, and institutions as
cultural models). Third, these studies dis-
cussed how policies and practices become
constructed as enhancing efficiency and thus
as ‘rational’ behaviour, and thus eventually
taken-for-granted. Finally, these studies do
not assume that new practices/models
already exist. Instead, they point to the recip-
rocal relationships involving professions,
regulators and organizational managers in
constructing business models in response to
ambiguous legislation. As Scott (2004: 9)
notes, ‘this implies a transmutation over time
of regulative into normative and cultural-
cognitive elements’.
 INTRODUCTION
Much of this work failed to become incor-
porated into the majority of studies that have
appeared in the organization and manage-
ment journals. For example, of the 12 articles
on institutional change published in the
Special Issue on Institutional Change of the
Academy of Management Journal (Dacin
et al., 2002), only four refer to either Dobbin
or Edelman and none provides a full account
of how those authors combined regulatory
and cultural notions of institutions. Most
work has continued to treat the regulatory
institutional processes as synonymous with
coercive processes arising from the power of
state agencies or from organizational hierar-
chies, and thus has basically collapsed this
component of institutional analysis into
resource dependence theory, ignoring the
more nuanced approach of Edelman. In
short, two discrete institutional communities
have developed, each drawing on different
predecessor works and each being cited by
different colleagues.
There is a risk of a third discrete commu-
nity. Scandinavian research over the last
decade has focused not upon the role of the
State, but upon the emergence of ‘soft’ regu-
lations (e.g. Mörth, 2004; Djelic & Sahlin-
Andersson, 2006). For these theorists, the
institutional change of interest is the dis-
placement of coercive, state-level regulations
by more voluntary regulations such as stan-
dards (Brunsson & Jacobsson, 2000), rank-
ings (Wedlin, 2006), and accreditations
(Hedmo, 2004). These softer regulatory
structures are developed and applied by non-
governmental agencies (note, for example,
the influence of The Financial Times and of
accreditation bodies such as the AACSB
upon business schools!) and elicit compli-
ance because they provide legitimacy (Djelic
& Sahlin-Andersson, 2006). Two features of
this work are worth noting. First, it repre-
sents another attempt to bridge the two defi-
nitions of institution. Because of their
voluntary nature, soft regulations only work
in conjunction with relative cultural homo-
geneity. There is, therefore, in this work, the
same attempt observed in the Edelman and
21
Dobbin work, to draw upon institutions as
regulatory structures (although not coer-
cively enforced) and institutions as cultural
expressions. Second, much of the work
points to transnational agencies as the source
of soft laws and traces the diffusion of
practices across societies.20
Institutional logics
The introduction of institutional logics into
contemporary institutional theory is com-
monly attributed to Friedland and Alford
(1991), who were concerned to move institu-
tional thinking forward by incorporating an
explanation for institutional change. They
proposed that modern capitalist societies
have ‘central institutions’ that have ‘poten-
tially incompatible’ institutional logics. It is
the incompatibility of logics that provides the
dynamic for potential change. The picture is
of actors recognizing opportunities for
change because of their location at the inter-
stices of conflicting logics and instigating
change by ‘appealing’ to these logics.
Thornton (2004) developed these ideas
furthest and refined the list of central
institutions.
Thornton and Ocasio (Chapter 3, this
volume) caution that the term ‘institutional
logic’ is in danger of becoming ‘a buzz
word’. Moreover, and as is usual in institu-
tional work, definitions and usage vary. An
important distinction is between those, such
as Thornton, who retain the idea that logics at
the field level are nested within higher-order
societal institutional logics, and others (the
majority) who identify logics within a field
without referencing their societal patronage.
Despite these differences, as the century
turned, exploration of how institutional
logics shape organizational behaviours and
how those logics are historically dependent
became a vibrant research theme. As
Thornton and Ocasio (Chapter 3 this volume)
point out, a clear implication of the logic
construct is that there will be variation across
sectors, fields and historical periods, contrary
to the later ideas of Meyer (e.g. see Drori,
Chapter 18 this volume).
22 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
TAKING STOCK
Tracing the historical developments of insti-
tutional theory from 1977 to the present, we
have sought to reflect on the most prominent
themes and constructs that continue to define
the distinctive substance of the theory’s con-
tribution. To that end, we analyzed three time
periods. The foundations period, from 1977
to 1983, laid the substratum of important
constructs – institution, institutional context,
institutionalization, and isomorphism – upon
which the initial articulations of the theory
were built. Where construct definition was
lacking in the literature during this period,
we have offered our own. Five basic elements
of institutional theory during this period were
summarized, together with our interpretation
of the overall questions and potential
answers which institutional theory examined
and, importantly, continues to examine,
thereby giving coherence and continuity to a
perspective which has otherwise proliferated
in multiple directions across diverse empiri-
cal settings and topics.
The second time period, 1983 to 1991,
revealed the development of four areas of
study – processual, cross-category, cross-
national, and means of transmission –
encompassing, respectively, diffusion, com-
parisons between State or nonprofit agencies
and commercial organizations, national cul-
ture, and the role of networks, consultants
and executives in transmitting or communi-
cating institutional values and beliefs.
During this period, researchers also initiated
combinations or juxtapositions of institu-
tional theory with other perspectives
(resource dependence theory, population
ecology, for example). Ambiguities emerged
around the meaning of isomorphism (occa-
sionally misapplied as inevitable homogene-
ity) and institutional context (as cultural
prescriptions versus regulatory policies, the
latter being defensible as an institutional con-
struct only insofar as they reflect societal
norms and values). Nonetheless, this period,
we suggest, also spawned material insights
into how organizations, as active agents and
political actors, operate upon their environ-
ments for either instrumental or social gain.
In the third period (1991 to the present),
we have argued that the most conspicu-
ous theoretical developments surrounded
institutional isomorphism (as a more
complex phenomenon inclusive of network-,
intra-organizational-, identity- and transla-
tion-based responses to institutional pres-
sures); legitimacy as agency (together with
clarification of the construct by Suchman,
1995); institutional entrepreneurship and
change (embracing the characterization of
organizations and their fields as conflicting,
contested, or legally constituted terrain); and
institutional logics. Furthermore, empirical
work had broadened to include a wider range
of industries and practices (although hospi-
tals were a favoured site!). By the end of the
period, much of the theoretical story had
been confirmed by the detailing of previ-
ously inferred steps (e.g. by showing how
ideas move between organizations and which
organizations serve as models). The com-
plexity of institutional effects had been rec-
ognized (e.g. that not all organizations
succumb easily to institutional processes,
that the dynamics and pacing of diffusion can
vary by type of innovation, that the dynamics
of adoption are different to those of abandon-
ment, and that the intensity of institutional
processes varies over time). Insights into
institutional change had been much
advanced, although emphasis primarily
remained on exogenous explanations. These
were all important elaborations. Moreover,
attention had begun to turn towards highly
significant issues: the emergence (and disap-
pearance) of organizational forms; the cre-
ation of markets; the adoption and
abandonment of market strategies; the inter-
action of organizational behaviour and finan-
cial markets; the adoption of affirmative
action in organizations and the determinants
of workplace violence; the institutional
antecedents of environmental management
and sustainability. These are important issues
within organization theory. Aldrich (1999:
53), for one, concluded that: ‘Despite
 INTRODUCTION
pressures from applied fields to focus on
narrow issues such as efficiency and intraor-
ganizational problems, institutional theory
has succeeded in expanding organizational
studies’ scope and vision’. Clearly, there has
been no withering of institutional effort.
As the literature of the 1990s and the
present decade gave expression to a startling
outgrowth of the theory’s explanatory possi-
bilities, the introduction of Scott’s (1995:
2001) three pillars and his accompanying
magisterial review of the field brought an
impressive (and influential) integrative focus
to the most generative period of institutional
theory’s development. Nevertheless, the
broadening scope of institutional applica-
tions heightens the risk of theoretical inco-
herence. However, before drawing our own
conclusions about the current status of insti-
tutional theory, let us first suggest directions
(the whithering) for future research and then
reflect in the Conclusions on our level of
optimism around the question initially posed
about the extent of coherence versus prolifer-
ation in the theory’s future.
New directions?
We suggest eight directions for future
research. These reflect both our concerns
about the state of institutional theory and our
reading of the recent growth in interest of
particular research areas.
First, although some progress has been
made, studies still struggle to relate institu-
tional processes to learning and to clearly
separate institutional effects from vicarious
learning (competitive isomorphism). By and
large, diffusion studies have continued to
assume that convergent behaviour indicates
the functioning of institutional processes (see
Haveman & David, Chapter 24 and Zilber,
Chapter 5 this volume) even though, at the
beginning of the 1990s, Haunschild had
pointedly remarked that: ‘[w]e know that
acquisitions are imitated, but we don’t know
why’ (1993: 588). Later in the decade,
Mizruchi and Fein (1999: 664) made the
23
same point, accusing researchers of ‘measur-
ing only the outcome while assuming the
process’. Mizruchi and Fein (1999) also
noted that most researchers report their find-
ings as evidence of mimetic effects but use
empirical measures that could just as easily
be interpreted as reflecting normative and/or
coercive processes. These criticisms, unfor-
tunately, still apply (cf. R. Meyer, Chapter 21
this volume). Nevertheless, mimetic behav-
iour is assumed (wrongly) within organiza-
tional theory as indicative of institutional
processes and as empirically confirmed.
Haunschild’s (1993) study, for example, is
extensively cited as evidence of institutional
mimesis but only a minority of those doing
so have acknowledged Haunschild’s own
cautious interpretation of her results.
For this reason, future research might ben-
efit from more nuanced explanations of the
processes behind, and reasons for, mimetic
behaviour. Research should attempt to inter-
pret and identify the institutional logics
(Thornton, 2002; Thornton & Ocasio,
Chapter 3 this volume) or structures of shared
values and beliefs that induce and propel
imitation (cf. Czarniawska, Chapter 32 and
Sahlin & Wedlin, Chapter 8 this volume).
Another approach might be to contrast
the literature on bandwagon effects
(Abrahamson, 1996; Henderson & Cool,
2003) with current knowledge of mimetic
isomorphism to illuminate with more sub-
tlety and accuracy the distinction between
technically rational and legitimating motiva-
tions of organizational imitation. In the inter-
ests of broadening attention beyond mimetic
processes, further elaboration of coercive
and normative mechanisms also appears war-
ranted (Kock, 2005; Haunschild & Chandler,
Chapter 26 this volume). For example,
recent theory development applying an insti-
tutional perspective to government and
policy making has begun to illuminate gov-
ernment efforts to overturn or reinterpret bar-
gains with foreign investors (Henisz &
Zelner, 2005). The institutional literature’s
rather selective emphasis on imitative or
vicarious learning also invites a broader
24 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
application of the theory to other forms of
organizational learning, and it may be partic-
ularly relevant to the current emphasis in the
organizational learning literature on learning
through exploitation (replication or refine-
ment of existing routines) versus exploration
(concerted variation and experimentation)
(March, 1991; Gupta, Smith & Shalley,
2006). Just as the replication of existing rou-
tines may be partially explicable by institu-
tionalized, legitimized or taken-for-granted
understandings, so too may learning through
exploration occur along entirely new trajec-
tories through the intervention of institu-
tional entrepreneurs (Maguire, Hardy, &
Lawrence, 2004; Greenwood & Suddaby,
2006). These theoretical conjectures, how-
ever, await empirical validation.
Second, many studies have been parsimo-
nious in their account of institutional
processes. Meyer and Rowan’s (1977)
emphasis upon taken-for-granted cultural
models has become somewhat reduced in
some accounts to mapping the diffusion of
highly specific managerial practices, or, in
later studies, to organizational foundings.
Many of the earlier diffusion studies, in par-
ticular, tended to tell a less expansive story,
deploying large-scale analysis to rigorously
examine very narrowly drawn hypotheses.
Stinchcombe (1997) was particularly critical
of the tendency to ‘mathematize’ institutional
effects, accusing its proponents of missing
‘the guts’ of institutional influences.
Not all diffusion researchers have
restricted their attention to specific manage-
rial practices. D’Aunno, Sutton and Price
(1991), for example (see also Schneider,
1993), compared the adoption and the conse-
quences of competing mental-health care
models. These models have broad implica-
tions, including the choice of organizational
form, the scope of professional status, and
the kinds of technologies to be deployed. As
such, this study is very different in its scope
than most diffusion studies. It is also note-
worthy that ‘recent theoretical developments
have moved from a “diffusion” to a “transla-
tion” model for understanding institutional
processes’ (Zilber, 2006: 281). Translation,
as previously noted, refers to the transforma-
tion of ideational and material objects within
and during the process of adoption, diffusion,
and/or institutionalization (Czarniawska &
Joerges, 1996; Czarniawska & Sevón, 2005;
Zilber, 2006). Its emphasis on the symbolic
aspects of institutionalization (Sahlin-
Andersson, 1996), the complexities sur-
rounding the construction of rational myths,
and the travel of ideas across organizational
fields (Rao, 2004; Djelic & Sahlin-
Andersson, 2006; Thornton & Ocasio,
Chapter 3 this volume), offers the promise of
more rich and detailed insights into how
institutional practices and processes migrate
and diffuse across fields and over time.
Another timely extension to future
research on diffusion might draw inspiration
from Sanders and Tuschke’s (2007: 33) study
of diffusion across distinct fields, particularly
in cases where practices spread ‘from one
institutional environment, where it is widely
prevalent and taken-for-granted, to another
environment, where its introduction violates
all three of Scott’s pillars of legitimacy’. The
possibility of viral institutional diffusion that
jumps from one institutional field to another,
where its spread is unexpected, offers a more
rigorous test of the power and limits of insti-
tutional diffusion and the coercive, normative
and cognitive forces underlying diffusion
trajectories that are sufficiently powerful
to infiltrate unexpected terrain. As Sanders
and Tuschke (2007) observe, we may also
generate new understanding about how
organizations learn from multiple or differ-
ing institutional contexts. Leicht and Fennel
(Chapter 17 this volume) examine an
instance of ‘viral diffusion’ in their analysis
of the diffusion of managerial logics and
practices from the corporate sector to the
professions.
Third, for the most part, institutional work
has remained stubbornly silent on issues of
social power, although, as we noted above,
incorporation of social movement theory holds
considerable promise (e.g. Rao & Kenney,
Chapter 13 this volume). There have also
 INTRODUCTION
been some attempts to examine issues of
stratification and entrenched patterns of dis-
crimination (e.g. Lucas, 2003), social posi-
tion (e.g. Battilana, 2006) and the
relationship between institutionalized beliefs
and patterns of intraorganizational privilege
(e.g. Zilber, 2002). Suddaby et al. (2007)
analyzed the link between the Big Four
accounting firms and non-governmental
transnational organizations such as the World
Trade Organization, and cautioned against
the loss of professional accountability. But
these remain rare exceptions. Two examples,
both of which refer to the functioning of
financial markets, illustrate the relative neg-
lect of elite interests and social power.
Hayward and Boeker (1998) documented
how security analysts rate their firm’s clients’
securities more favourably than other ana-
lysts rating the same securities. These biases
were concealed through symbolic acts (codes
of ethics, Chinese walls) that legitimated
investment banks as trustworthy and beyond
reproach. (This façade of legitimacy surround-
ing the operations of professional service
firms would collapse some years later follow-
ing the Enron affair). Westphal and Zajac
(1998, 2001) analyzed how corporations
adopt but fail to implement symbolic practices
(such as long-range incentive plans for chief
executives) in order to appease shareholders
and manipulate share values. On the one hand,
this can be seen (as it was by Westphal &
Zajac) as an example of decoupling. On the
other, it could be seen as willful manipulation
of shareholder perceptions in order to affect
share prices. Both of these studies, in other
words, uncovered the dark side of symbolic or
legitimating behaviour – namely, the use of
symbols to adversely affect certain societal
interests while privileging others – but illus-
trate how we too often neglect to assess the
societal consequences of institutionalized cor-
porate behaviour. Fiss (Chapter 15 this
volume) extends this perspective by analyzing
corporate governance through an institutional
lens, observing how coalitions of actors con-
struct ‘moral orders’ that determine the power
structure of corporations.
25
An inviting door into the dark side of insti-
tutional processes comes from researchers
who have applied institutional theory to sus-
tainability and environmental issues (e.g.
Jennings & Zandbergen, 1995; Hoffman,
1999; Hoffman & Ventresca, 2002; Bansal &
Clelland, 2004; Bansal, 2005; Davis &
Anderson, Chapter 14 this volume). To the
extent that sustainability researchers see
unresolved tensions between instrumental
and moral solutions to environmental
destruction, institutional theory’s refutation
of exclusively rational economic motives of
organizational behaviour may serve as a
useful bridge to less instrumentally reasoned
and more socially justified bases for studying
societal-level harm. In a suggestive case
study of ISO standard adoption, Boiral
(2007), for example, examined corporate
greening as an institutionalized rational myth
and revealed the extent to which the adoption
of environmental standards was a ceremonial
and potentially hypocritical environmental
strategy.
Overall, however, we have limited under-
standing of how power, conflict and funda-
mental social interests affect and are affected
by institutional processes. There have been
clarion calls for giving attention to the sys-
temic structures of power and domination
that define institutions and that privilege their
ruling elites. Useful frameworks have been
advanced (e.g. Lawrence, Winn & Jennings,
2001; Hargrave & Van de Ven, 2006; Cooper,
Ezzamel & Willmott, Chapter 28 and
Lawrence, Chapter 6 this volume). But
empirical work is badly needed. As sug-
gested by Hasse and Krücken (Chapter 22,
this volume) and R. Meyer (Chapter 21, this
volume) issues of power and conflict could
be more thoroughly understood if current
conceptual tools of organizational institu-
tionalism were to be combined with the
closely related European sociology of knowl-
edge and system theories.
Fourth, most studies have portrayed insti-
tutional processes as fully formed (Aldrich,
1999: 52) and underplayed Meyer and
Rowan’s (1977) emphasis that institutional
26 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
contexts are socially constructed. Barley and
Tolbert (1997: 93) attempted to redress this
imbalance, first by criticizing institutional
theory’s neglect of how institutional arrange-
ments are ‘created, altered, and reproduced’,
and second by proposing incorporation of
Giddens’ theory of structuration (for an early
attempt to do so, see Phillips, Lawrence &
Hardy, 2000). Barley and Tolbert’s (1993)
central concern, that most researchers had
simply assumed the existence of institutions,
was largely correct, although there were
exceptions. Edelman’s work, for example, as
described above, clearly addressed institu-
tional creation, albeit at a much more socie-
tal level than perhaps intended by Barley and
Tolbert (1997). Suchman and Cahill (1996)
had traced how interactions between Silicon
Valley lawyers and their clients constructed
and then reproduced normative models of
appropriate behaviour in the venture capital
industry. Bacharach, Banberger and
Sonnenstuhl (1996) had analyzed the
micropolitics of dissonance reduction that
enabled transformational change within an
organization (see also Johnson, Smith &
Codling, 2000). At a more macro-level,
Ingram and Inman (1996) had tracked how
regulatory ‘institution building’ arose from
collective action. By and large, however,
institutional studies had not been overly con-
cerned with how institutions arise.
Following publication of Barley and
Tolbert’s paper, various developments
addressed their concerns. The late 1990s saw
early stirrings of interest ‘discourse theory’
(Phillips & Hardy, 1997; see Phillips &
Malhotra, Chapter 29 in this volume), ‘narra-
tives’ (Czarniawska, 1997 and Chapter 32, this
volume), and the role of ‘rhetoric’ (Zbaracki,
1998; Suddaby & Greenwood, 2005). Related
work by Lawrence et al. (2002) examined
how ‘proto-institutions’ (institutions in the
making) can evolve from interorganizational
collaboration. Powell, White, Koput and
Owen-Smith’s (2005) award-winning study
of network structures in the US biotechnol-
ogy industry provided a complex account of
how the bases of affiliation (who partners
with whom) change as fields mature
(see also Owen-Smith & Powell, Chapter 25
this volume). Anand and Watson (2004)
demonstrated the role of ‘tournament ritu-
als’, such as the Grammy Awards, in field
construction. Greenwood and Suddaby
(2006) looked at professional associations as
forums within which members of a profes-
sion define and theorize its appropriate
boundaries. Fligstein (2002) looked at how
regulatory institutions and economic activity
develop symbiotically and coalesce into
stable fields. Garud, Jain and Kumaraswamy
(2002) traced the tensions and political
dynamics involved in adoption of field-wide
common technological standards. Brunsson
and Jacobsson (2000) looked at emerging
standardization procedures. Wedlin (2006)
looked at rankings of business schools and
Djelic and Sahlin-Andersson (2006)
explained the institutional dynamics of new
regulations (cf. Sahlin & Wedlin, Chapter 8
this volume). All of these studies are steps
towards understanding processes of institu-
tional construction. Powell and Colyvas
(Chapter 10, this volume) and Colyvas and
Powell (2006) elaborate key questions of
this research agenda, including how cate-
gories and routines emerge, and illustrate
how archival materials may be used to
address them.
Separating institutional construction (how
institutions and fields emerge) from institu-
tional reproduction, is not easy and more
attention has been given to the former than
the latter. But an important and imaginative
line of research is Zuckerman’s exploration
of ‘categorical imperatives’ (Zuckerman,
1999, 2000; Zuckerman & Kim, 2003; see
also Rao, Monin & Durand, 2003; Durand,
Rao & Monin, 2007). Zuckerman’s work has
a broader theoretical purpose, but it rightly
identified the failure of institutionalists to
demonstrate ‘that defying classification’ (i.e.
deviating from socially accepted cognitive
frameworks) ‘invites penalties’ (1999: 1399).
A core theme of organizational institutional-
ism is that deviation from socially defined
expectations of appropriate conduct are,
 INTRODUCTION
often subtly, projected onto social actors who
are cajoled into conforming by self-
activating mechanisms of disapproval.
Zuckerman’s work is a rare, early examina-
tion of this social process. More work in this
area is clearly warranted.
Interestingly, current work on cognition in
the strategy literature has remained divorced
from Scott’s well-recognized (2001) cogni-
tive pillar and from the scope of institutional
research on the construction and transmis-
sion of organizational practices as shared
cognitions and logics (Daniels, Johnson & de
Chernatony, 2002). Roberts (Chapter 23, this
volume) makes the similar point that ‘much
less in the way of published work seems to be
integrating Scott’s (1995) cognitive pillar
with economic perspectives on organiza-
tions’. Notwithstanding work by Porac and
his colleagues (Porac, Thomas, Wilson &
Kanfer, 1995), the strategic management lit-
erature has confined its work on cognition
primarily to cognitive biases and to the infor-
mation processing limitations and effects of
actors’ cognitive maps (‘mental models’) in
making strategic decisions (Huff, 1997;
Tripsas & Gavetti, 2000). By juxtaposing
notions of cognitive maps and schemas with
Scott’s (2001) characterization of the cogni-
tive pillar in institutional theory, we may
learn more about how such cognitive maps
become taken-for-granted as appropriate or
legitimated mental models in the first place
(Hasselbladh & Kalinikos, 2000) and how
these models become shared across decision
makers confronting similar challenges and
environments (cf. also Czarniawska, Chapter
32 this volume).
Fifth, the study of institutional change
brought forward several attempts to identify
the stages of institutionalization. Tolbert and
Zucker (1995) identified three stages, but
ignored how arrangements might erode and
be displaced. Greenwood et al. (2002) sug-
gested five stages, from deinstitutionalization
through to diffusion/translation and subse-
quent re-institutionalization. But despite
early attention from Oliver (1992) and Davis
et al. (1994), and Clemens and Cook’s (1999)
27
useful analysis of the conditions conducive
to institutional entropy, deinstitutionalization
has remained largely neglected (see Dacin &
Dacin, Chapter 12 this volume). As Scott
put it, institutional work has failed to capture
the ‘arc of institutionalization’ (2005: 472),
focusing instead upon ‘the middle moment’
(2005: 471). Ahmadjian and Robinson’s
(2001: 647) remark that ‘deinstitutionalization
is not simply institutionalization’s converse’
raises the call for better understanding of
how institutions decline.
As a means of introducing more integration
to the literature on institutional change and to
push for its fuller theoretical treatment,
Hargrave and Van de Ven (2006) developed a
typology that identifies four internally consis-
tent and distinct models of institutional
change, which they label institutional design,
institutional adaptation, institutional diffu-
sion, and collective action models. Stated
briefly, the institutional design model
‘focuses on the intentional behaviours of an
individual entrepreneur engaged in the cre-
ation or revision of an institution to achieve
his or her goals’; the institutional adaptation
model ‘explains how and why organizations
conform to forces in the institutional environ-
ment’; the institutional diffusion model
‘focuses on how and why specific institu-
tional arrangements are adopted (selected)
and diffused (retained) among institutional
actors in a population’; and the collective
action model ‘examines the construction of
new institutions through the political behav-
iors of many actors who play diverse and par-
tisan roles in the organizational field or
network that emerges around a social move-
ment or technical innovation’ (Hargrave &
Van de Ven, 2006: 867–8). These authors call
for further theorizing around the collective
action model, which they view, correctly, as
the most recent of the four models of institu-
tional change, and the one least understood.
Overall, their work brings a welcome move-
ment toward integration in the literature on
change and provides a set of categories for
distinguishing among widely different types
and stages of institutional change.
28 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Nevertheless, ‘much theorizing remains to be
done’ (Hargrave & Van de Ven, 2006: 884).
Sixth, there is a growing interest in cross-
national studies. Until recently, there was a
concern that institutional work was becom-
ing distilled through the lens of US cultural
and social dynamics. Such an ethnocentric
perspective risked missing interesting and
important institutional effects (Biggart &
Hamilton, 1990; Orru, Biggart & Hamilton,
1991; Guillen, 2001). Mizruchi and Fein
had speculated that the myopic focus of
US scholars is a consequence of ‘the domi-
nantly held view among leading North
American organizational researchers that
emphasizes cognitive decision-making
processes at the expense of inter-organiza-
tional power and coercion’ (1999: 677). In
short, Mizruchi and Fein feared that North
American researchers were reproducing a
world-view (rationalized myth?) that
provides ‘a limited picture of the world’
(1999: 680).
The concern about an ethnocentric focus
may have been premature. Recent work
reveals that a significant number of studies
are applying institutional theory to an inter-
national context and, in doing so, are opening
up the relevance of the theory to new topics,
such as foreign entry mode (Yiu & Makino,
2002), foreign investment and the impact
of host country governments (Henisz &
Zelner, 2005), capital structures in foreign
economies (Keister, 2004), the choice of
international alliance partner (Hitt, Ahlstrom,
Dacin, Levitas & Svobodina, 2004), and firm
turnaround (Bruton, Ahlstrom & Wan, 2003).
Several theorists gained insight into these
and similar practices by combining organiza-
tional with comparative institutionalism
(e.g. Djelic & Quack, 2003). For us, it is
especially interesting to note the growing
application of institutional theory to emerg-
ing economies (e.g. Peng, 2003; Keister,
2004; Vaaler & McNamara, 2004; Child &
Tsai, 2005; Chang, Chung & Mahmood,
2006; Dobrev, Ozdemir & Teo, 2006). Work
on the politics of institutional translation
across cultures also holds future promise
(e.g. Djelic, 1998; Guler, Guillen &
MacPherson, 2002; Sahlin-Andersson &
Engwall, 2002; Djelic & Quack, 2003; Djelic
& Sahlin-Andersson, 2006; Drori, Chapter
18 this volume). Frenkel’s (2005) study of
how state-level institutional power structures
imported two management models – scien-
tific management and human relations –
from different cultures demonstrated how
cross-national translation occurs and how
these management models changed their
social meaning as they moved from one
culture to another. Some researchers have
examined how ‘institutional distance’
(Kostova, 1999) between parent MNCs
(almost always, US corporations) and for-
eign countries affect investment and expan-
sion decisions.
Seventh, institutional theory has gained
enormously for many years from its combi-
nation with, or incorporation of, other theo-
ries (see the Interfaces section of this volume
for the most current examples of this impor-
tant work). Somewhat surprisingly, a particu-
larly pronounced growth in the application of
institutional theory to mainstream strategy
topics has not been accompanied by the
explicit juxtaposition of institutional theory
and specific strategy theories, apart from a
limited and selective combination of institu-
tional theory with the resource-based view
(Oliver, 1997), transaction cost theory (Yiu
& Makino, 2002), and agency theory
(Young, Stedham & Beekun, 2000).
Institutional theory has been increasingly
applied to topics in strategy as diverse as
mergers (Krishnan, Joshi & Krishnan, 2004),
firm heterogeneity (Walker, Madsen &
Carini, 2002), firm diversification (Peng, Lee
& Wang, 2005), the effects of corporate
boards on firm performance (Peng, 2004),
firm reputation (Rhee & Haunschild, 2006),
the legitimacy of strategic alliances (Dacin,
Oliver & Roy, 2007), and managers’ mental
models of competition (Daniels et al., 2002).
The literature has witnessed almost no
attempts, however, to combine, more
comprehensively, a strategy theory with
institutional theory.
 INTRODUCTION
An exciting direction for future research
may be the juxtaposition of institutional
theory and the dynamic capabilities frame-
work (Teece, Pisano & Shuen, 1997; Helfat
& Peteraf, 2003; Helfat, Finkelstein,
Mitchell et al., 2007), arguably one of the
more prominent perspectives in current strat-
egy theory. This framework focuses on firms’
capabilities to ‘integrate, reconfigure, and
release resources to match and even create
market change’ (Eisenhardt & Martin, 2000:
1107). Specifically, dynamic capabilities
refer to the capacity for rent appropriation
and profit stemming from an organization’s
‘capability to effectively coordinate and
redeploy internal and external competences
… to achieve congruence with the changing
business environment’ (Teece, Pisano &
Shuen, 1997: 515). To our knowledge, no
one has addressed institutional theory’s
implications for this strategic perspective (or
vice versa). In examining an organization’s
existing routines and the factors that
facilitate or impede organizational change,
the theory of dynamic capabilities shares
institutional theory’s interest in how organi-
zational practices become entrenched in the
cognitive repertoire of organizational rou-
tines, and the ways in which the changing
environment molds them. Further research,
therefore, might extend dynamic capabilities
theory to consider the ways in which the
adoption and diffusion of norms and values
in the institutional environment impede
rent appropriation or, alternatively, how insti-
tutional legitimacy sustains or even acceler-
ates the flow of resources and informa-
tion to organizations for developing their
capabilities.
Eighth, and finally, institutional theory
evolved as an antidote to the overly rational-
ist and technocratic perspectives of the
1960s. It emphasized the role of cultural
forces within an institutional context and
homed in on the organizational field as the
level at which such cultural pressures are
more evident. As a consequence, the
overwhelming majority of studies now take
for granted that the organizational field or
29
environment is the level of analysis (see
Wooten & Hoffman, Chapter 4 this volume).
Other levels of analysis have been rarely con-
sidered. For example, few studies treat the
organization as the level of analysis (Ocasio,
1994) or examine how the organization
might be treated as an institutional context
for understanding intraorganizational behav-
iour. An interesting exception was Goodrick
and Salancik’s (1996) study of how cesarean
section surgeries varied by type of hospital
and the ambiguity of institutional standards
within them. Using hospital-level data, they
found that when uncertainty was greatest,
hospital characteristics significantly influ-
enced cesarean section rates. Their work
showed how technical practices become
embedded in institutional frameworks at the
organizational level, and how these frame-
works come to define the ways in which
technical forces operate. We see considerable
promise in this change to an intraorganiza-
tional level of analysis for expanding insights
into institutional processes. Recent scholars
have made a compelling case for an intraor-
ganizational level of analysis by combining
an institutional perspective with such micro-
theories as prospect theory and the threat-
rigidity hypothesis (George, Chattopadhyay,
Sitkin & Barden, 2006). Washington, Boal &
Davis (Chapter 30, this volume) adopt an
explicitly intraorganizational perspective as
they integrate institutional and leadership
theories.
While any number of intraorganizational
phenomena might be informed by an institu-
tional perspective (see for example, Quaid’s
1993 article on job evaluation as an institu-
tional myth), we are particularly intrigued by
Weber and Glynn’s (2006) call for an explo-
ration of the connections between institu-
tional and sense-making perspectives. Weber
and Glynn (2006: 1639) note that a recurrent
criticism of Weick’s (1995) influential
work, specifically its ‘neglect of the role of
larger social and historical contexts in
sense-making’, can be partially addressed
by showing how the institutional context
may be an important part of sense-making
30 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
within organizations. Treating the organiza-
tion as the institutional context for sense-
making would also go far, we believe, in
adding to institutional theory. In its own neg-
lect of the more micro-dynamics of sense-
making, institutional theory has relinquished
the opportunity to develop a richer theory of
the intersubjective processes of perception,
interpretation and interaction that establish
the core of a micro-level understanding of
institutionalization. Therefore, like DiMaggio
and Powell (1991) and Zucker (1987) we
continue to see value in amending institu-
tional theory to include more elaborated
micro-foundations and we propose that theo-
rists might begin with Weick’s (1995) formu-
lation of sense-making in organizations. This
focus on sensemaking also accords with
recent criticisms of institutional theory that
have suggested the need for more emphasis
on ‘the various ways by which ideas are
objectified i.e. developed and embedded into
solid and durable social artifacts’ within
organizations (Hasselbladh & Kallinikos,
2000: 699). A rare example of this theoretical
purpose underlies Johnson, Smith and
Codling’s (2000) conceptualization of priva-
tization as a series of individual actors’
attempts to enact and make sense of a change
from a ‘public’ to a ‘privatized’ institutional
template through micro-level processes of
script development. In this volume (Chapter
32) Czarniawska calls for an elaborate under-
standing of how ideas are objectified,
but also of how they form in relation to new
technologies.
Unlike the call for better understanding of
intraorganizational processes, a second chal-
lenge to the dominance of field-level analysis
emphasizes how the abstractness of the field
concept may have inadvertently disembed-
ded institutional analysis. The field concept
originally developed (see Wooten &
Hoffman, Chapter 4 this volume) because of
dissatisfaction with the term ‘industry’,
which neglects the role of agencies such as
professional and trade associations, regula-
tors, the media and the State. However,
organizations are not only set within a field,
they are also located within communities.
Only recently has institutional work begun to
acknowledge that communities may influ-
ence the particular expression of rationalized
myths and institutional logics to which
organizations have to respond. Marquis
(2003), Marquis et al. (2007), Magan Diaz,
Greenwood, Li and Lorente (2007), and
Marquis and Lounsbury (2007), have each
recognized that local or regional communi-
ties are part of the institutional context.
Marquis (2003), for example, traced the elite
social organizations and cultural associations
that connect organizations within a bounded
geographical setting. Magan et al. (2007)
suggested that connections between organi-
zations and local political elites influence
decisions on the utilization of human
resources.
These studies imply that the concept of
organizational field may have been consid-
ered unduly narrowly, and the roots of the
field concept may prove helpful in order to
make it into a more elaborate conceptual tool
(Martin, 2003; Mohr, 2005; Djelic & Sahlin-
Andersson, 2006). Although it has proved,
and will continue to be, a useful level of
analysis, it may have become too abstract
and thus divorced from the socio-political
community within which institutional and
organizational processes occur. As Magan
et al. put it: ‘Analytical abstraction, intended
to better capture contextual influences, has
resulted in blindness to how communities
affect organizations. The relationship
between communities and organizations was,
of course, integral to early institutional work
(Selznick, 1949) but that focus has largely
disappeared. A return to the traditional
emphasis upon community would be timely’.
We agree.
CONCLUSIONS
If institutional theory is decidedly not wither-
ing over time in its use and migration within
and across the discipline of organization
 INTRODUCTION
theory (as the sheer number of recent journal
articles bears witness), we still need to ask
whether its power to explain organizational
phenomena is withering in light of its rather
splintered proliferation. Our answer is a
somewhat emphatic no, not only because we
see thematic cohesion around its basic theo-
retical question and ‘answer’, but because we
continue to find its questions infinitely inter-
esting, its capacity to contextualize organiza-
tional phenomena beneficial, and its tolerance
for theoretical and methodological pluralism
advantageous to knowledge sharing within
organization analysis. We began this
Introduction by identifying the central ques-
tion of institutional theory that we felt gave
value to its perspective as originally developed
by early institutional theorists: why and with
what consequences do organizations exhibit
particular organizational arrangements that
defy traditional rational explanation? We see
the perpetuation of this central question to the
present day as the intellectual stimulus that
gives coherence to a theory that in other
respects has expanded its applications to an
impressively wide array of topics. Similarly,
we identify the ‘answer’ emphasized by insti-
tutional theory as laying claim to unique
insights into the play of widely shared or
taken-for-granted social values and ideas that
complement, if not defy, calculative rational-
ity and instrumental functionality. Perhaps
the most notable shift in emphasis and inter-
pretation over the past three decades has been
from treating the context of social values and
ideas as influences upon organizations,
towards recognition of the interplay of organ-
izations with their contexts. It is our position
that the endurance of institutional theory’s
fundamental question and answer is a testa-
ment to the resilience and robustness of the
perspective. In answering the query stated at
the outset of the Introduction, we reject the
notion that theories invariably fragment into
proliferated confusion. The coherence and
endurance of institutional theory’s core ques-
tion and answer run through most institutional
work, bringing a surprising semblance of
order to a literature that exhibits rich variety.
31
Our eight foregoing directions for future
research reveal our own position on the
theory’s strengths, limitations, and opportuni-
ties. We see that there is still much for institu-
tional theory to address. More broadly, we
have three reasons to feel that the overarching
strengths and contributions of institutional
theory far outweigh our few lingering but by no
means irrevocable misgivings about the theory.
First, a review of institutional theory from
its early foundations to its current applica-
tions reveals an impressive tradition of inter-
facing with numerous other theories (e.g.
network theory, resource dependence theory,
ecology theory) to explain a correspondingly
broad range of organizational phenomena
(e.g. organizational structure, change, iden-
tity, alliances, foreign entry). The use of
institutionalism with so many other theories
and topics rather than in relative isolation is,
we believe, a conspicuous and significant
strength. For as Nobel prizewinner Erwin
Schrodinger (1951: 6) observed: ‘… [i]t
seems plain and self-evident, yet it needs to
be said: the isolated knowledge obtained by a
group of specialists in a narrow field has in
itself no value whatsoever but only in its syn-
thesis with all the rest of knowledge’.
Institutionalism’s proliferation, however,
comes at the expense of linguistic specificity.
Even the term ‘institutional’ defies precise
definition, leaving it open to alternative con-
ceptual constructions that are adapted to the
topic at hand. It is for this reason, among
others, that we encourage a greater focus on
developing a more common vocabulary in
future developments of the theory. Thus,
while we are delighted by the theory’s range
of application, we continue to hope for fur-
ther consensus around construct definition.
We also believe that the underspecification
of institutional theory’s constructs is not alto-
gether an incontestable impediment to theory
building and research. We share Barbara
Czarniawska’s view (Chapter 32, this volume)
that ‘the strength of institutional theory lies in
the tolerance of its propagandists.’21 We view
the present scope of contributors to institu-
tional theory’s growth as an indication of an
32 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
epistemological pluralism that tends to dis-
courage polarizing styles of arguments or the-
matic quests for a monopoly on truth. It is not
that all elements of institutional theory are
inevitably reconcilable with all approaches or
perspectives; indeed, this is far from the truth
(see Cooper et al., Chapter 28 this volume).
Rather, the stunning variety of topics and
methodologies drawing on institutional
theory that we now witness in the literature is
itself evidence, in our opinion, of the inven-
tiveness and flexibility of the many who
apply it. In the interests of guarding this plu-
ralism, we tend, therefore, to favour the
broader construct definition of ‘institutions’
put forward by Scott (1995: 33):
Institutions consist of cognitive, normative, and
regulative structures and activities that provide sta-
bility and meaning to social behaviour. Institutions
are transported by various carriers – culture, struc-
tures, and routines – and they operate at multiple
levels of jurisdiction.
Such a definition increases specificity but
encourages continued application of institu-
tional theory to multiple levels, topics, and
settings.
Second, a distinct advantage of institu-
tional theory, we would argue, is its singular
refusal to accept reality at face value, and to
do so without the accompanying baggage of
cynicism. Institutional theory throws open
the possibility that any cherished aspect of
organizational life may be nothing more than
a theoretical artifact, but the theory’s implicit
agenda is not to heap ex ante scorn on the
causes of misguided or overly-rationalized
behaviour. Agnostic about the reasons for the
taken-for-granted understanding or social
consensus surrounding institutionalized
structures and behaviours, institutional
researchers have been free to roam in the the-
oretical territory of political domination,
unconscious reasoning, or social acceptabil-
ity to stake out their claim for theoretical
superiority in explaining institutionalization.
Thus, institutional researchers have been able
to trace the source of institutionalization and
persistence to factors as varied as interorga-
nizational collaboration, shared norms,
discourse, power elites, history and the ‘iron
cage’ of conformity pressures. Therefore,
while not asserting that institutional theorists
are ideologically agnostic, either individually
or in the aggregate, we nonetheless do not
see the institutional theorists that populate
our journals and bookshelves as pre-oriented
toward contempt for the persistence of
phenomena or the status quo, even when
such persistence is unjust or dysfunctional.
Our disdain (we hope) is for the injustices of
practices and not for the stability of a
practice per se.
It is our hope as well that indicators of
institutionalization be sufficiently neutral to
avoid foreclosing on avenues of research into
different manifestations of institutionaliza-
tion. Rather than insistence on a single
measure of institutionalization as that which
is strictly socially embedded, taken-
for-granted, or, alternatively, rooted in power,
we favour Selznick’s (1996) notion of institu-
tionalization as a comparatively neutral
concept, receptive to whatever arguments
best explain it, depending on the context in
which it occurs. Building on his early charac-
terization of institutionalization as indicative
of that which is infused with value beyond
the technical requirements at hand, Selznick
(1996: 271) suggests that we judge the
degree to which a phenomenon is institution-
alized as the extent to which it is expendable:
‘[t]he test is expendability, that is, the readi-
ness with which the organization or practice
is given up or changed in response to new
circumstances or demands’. This position is
consistent with Scott’s (2001: 213) exhorta-
tion that ‘we try to avoid and, to the extent
possible, eliminate theoretical arguments
based on exclusivist (often, dichotomous)
thinking’, (e.g. if the cause of persistence
is social then it cannot be political, or
vice versa).
Third, institutional theory has an important
capacity to stimulate contextualization. Just
as we cannot make feasible improvements in
knowledge of market economies by wishing
away their social context (see Roberts,
Chapter 23 this volume), so it is the case that
 INTRODUCTION
we cannot understand such knowledge with-
out recognizing that it is socially constructed
within a broader context. Institutional theory
has aided us in contextualizing the phenom-
ena we study, whether that context encom-
passes regulatory, historical, political,
cognitively tacit, or socially embedded set-
tings. Indeed, such contextualization is a
distinguishing (and distinguished) feature of
institutional theory and research.
Notwithstanding its capacity to stimulate
the contextualization of many phenomena,
institutional theory is simultaneously under
threat of serving the role of ‘default option’ in
the development of organization theory. We
see limited but somewhat alarming use of
institutional theory by other theorists who
engage institutional theory as a convenient but
under-theorized catch-all for what their own
theories cannot readily explain. The distinc-
tive aspect of institutional-theory-as-default
research is not necessarily its inaccuracy, but,
rather, the meagreness with which institu-
tional theory is applied; that is, the lack of
depth or richness in its use and the rather
perilous distance from institutional theory’s
core concepts, assumptions, and arguments.
Our intent is not to discourage interfacing
between theories, but to urge a more
comprehensive application of institutional
explanations to the topics they inform.
To that end, all the chapters in this book
are outstanding models for future engage-
ment with the theory. The chapters are
grouped into five distinct sections: Section I
reviews the Foundational Themes, recount-
ing the initial ideas that excited attention and
showing how those ideas have been tested
and enhanced. Section II, Institutional
Dynamics, contains a series of insightful
reviews of current scholarships and agendas
for future work. Section III, Applications,
illustrates the extensive range of significant
issues and contemporary problems to which
institutional theory can be applied. Section
IV, Interfaces, explores points of intersec-
tion with other theories, illustrating how the
relevance and potential of organizational
institutionalism continues to be sharpened
33
and extended. The last section, Reflections,
presents essays from leading intellectuals,
who reflect on the past and future of organi-
zational institutionalism, offering sometimes
provocative but always engaging insights
and observations. An important feature
of the five sections as a whole is that the
contributors are distinctly international and
include not only many of the leading
contributors to institutional thinking of
the past three decades, but exciting new
voices.
Overall, on the w(h)ithering of institu-
tional theory we remain fervent optimists,
and the quality and richness of this volume’s
contributions bear strong witness to this
point of view. Institutional theory is wither-
ing neither in its scope nor its relevance, and
we see no obstacles to a lively and productive
growth in the theory’s future. Perhaps Dick
Scott is correct in predicting that ‘the
major contributions of institutional theory to
organizational studies may still lie ahead’
(2005: 473). If there is a danger, perhaps
it lies in the suppleness of the theory’s
fit to so many topics, and the corresponding
temptation to assume that it explains
everything:
None of us can go a little way with a theory. When
it once possesses us, we are no longer our own
masters. It makes us speak its words, and do vio-
lence to our nature. (Newman, 1907: 222)
Let us not, therefore, become blind adher-
ents. Institutional theory’s seeming inclusive-
ness may lure us into believing we possess a
relatively comprehensive tool for explaining
the social character of organizations and
environments, that is, at best, incomplete
and, at worst, distinctly myopic. The size
(and enthusiasm) of institutional theory’s fol-
lowing is arguably the most insidious threat
to its capacity to reflect creatively and criti-
cally on its limitations and thus to keep
developing constructively as a theory of
organizations. Moreover, an institutional
perspective starts from a good question that
remains only partially answerable within the
limits of its own assumptions (see Kraatz &
34 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Zajac, 1996; Bowring, 2000). We remain,
nonetheless, optimistic about its future
because it has been relatively robust across
different epistemological styles and differing
disciplinary expertise, finding commensu-
rable justification for both political and
social rationales, and for both reflexive and
more reductionist explanations of organi-
zational action. If institutional theory
becomes too institutionalized, however, its
own legitimacy may exert an isomorphic or
homogenizing effect on the richness and
breadth of explanations it currently con-
tributes to our understanding of organiza-
tional processes and phenomena. And that,
should it happen, would be a signal of a
withering theory.
NOTES
1 As we note below, Mohr (2005) showed that
institutionalist theories have evolved essentially in
two directions. The dominant trend has directly fol-
lowed DiMaggio and Powell (1983) and privileged
studies and explanations of networks and interac-
tions. The other trend, centring around John Meyer’s
work, has privileged studies and explanations of
meaning. Mohr finds this division unfortunate and
sees great potentials in bringing the two aspects of
field back together (Djelic & Sahlin-Andersson, 2006
argue in the same direction).
2 Emphasis upon social values and cognitive
systems differentiates ‘organizational institutionalism’
(not a term used by Meyer & Rowan) from other
versions of institutionalism. Historical institutional-
ism, for example, betraying its origins in comparative
political science, focuses upon structures (institu-
tions) of the state (e.g. state agencies, corporate eco-
nomic actors such as unions and trade associations)
and traces how those structures enable and shape
the access of organized interests in decision-making
processes. Rational choice institutionalism, similarly,
also treats (self-) interest as the key driver of behav-
iour within a context of incentives and opportunities.
The sociocultural approach to organizational institu-
tionalism, in contrast, does not see motivation as
exclusively (or even primarily) interest-driven and in
doing so provides ‘an important corrective’ to other
organizational perspectives (DiMaggio, 1988).
3 A related but more micro approach to the insti-
tutional context emerged from the research pro-
gramme of Jim March, also at Stanford. March coined
the phrase ‘logic of appropriateness’. March empha-
sized that many decisions are not based on the cal-
culation of future consequences but are the outcome
of decision ‘rules’ or routines. March was developing
a view of organizations as institutionally embedded
and, even though his ideas were anchored in deci-
sion-making studies of bounded rationality (e.g.
March & Simon, 1958; Cyert & March, 1963), deci-
sion-making ambiguity (e.g. March & Olsen, 1976)
and, more broadly, political science (e.g. March &
Olsen, 1989), these ideas did not develop in isolation
from other contributions to institutional theory.
Sahlin and Wedlin (Chapter 8 this volume) review the
influence of this line of research, especially on
Scandinavian institutionalism. It is notable that three
of the primary theorists of institutional theory – John
Meyer, Dick Scott and Jim March – were based at
Stanford.
4 Scott (1983: 161) explicitly qualified any ten-
dency towards homogeneity: ‘While there may be
some convergence in the general overall pattern
exhibited by organizations, we are more impressed
by the variety of forms and practices encountered.
We see organizational environments as becoming
more highly organized but not necessarily in the
same manner; and the cultural beliefs governing
organizational practice, while similar in promoting
rationalization, still vary in their particular specifica-
tions for differing types of organizations’.
5 Before progressing, we wish to make the fol-
lowing comment. Meyer and Rowan (1977) and
Zucker (1977) were clearly influenced by Berger and
Luckman (1967). Berger and Luckman proposed that
social stability occurs in three stages: actors interact
and, over time, their interactions become ‘habitual-
ized’. Conforming to habitualized patterns makes
social interactions predictable and thus orderly.
Subsequently, habitualized actions become ‘recipro-
cal typifications of action’, i.e. the habits are recipro-
cally reflected upon and conceptualized as roles (i.e.
they become ‘objectified’). Once reciprocal typifica-
tions are passed on to third parties, especially new
generations, then reciprocal typifications become
regarded as ‘real’ and natural, i.e. they acquire ‘exte-
riority’ (Berger & Luckman, 1967: 58) or, in Tolbert
and Zucker’s terms, they become ‘sedimented’ and
taken-for-granted. A recurrent criticism of institu-
tional theory is that much research focuses upon the
objectification stage (Tolbert & Zucker refer to it as
‘semi-institutionalization’) rather than the sedimenta-
tion (full-institutionalization) stage. In this volume,
Renate Meyer argues that the legacy from Berger
and Luckman has largely become less visible in later
developments of organizational institutionalism, and
she shows that many of the recent questions posed
by theoreticians in the field could find much inspira-
tion and clarification from Berger and Luckman’s
work.
 INTRODUCTION
6 For example, Alan Meyer (1982), in discussing
how hospitals responded to a doctors’ strike referred
to Meyer and Rowan as follows: ‘Hospitals inhabit
highly institutionalized environments that may foster
the construction of superficial structural facades.
Meyer and Rowan (1977) argue that ceremonial
structures harmonizing with societal ideologies
attract resources and promote the survival of such
organizations. But this study suggests that ceremo-
nial structures may also promote survival and
resource conservation by harmonizing with organiza-
tional ideologies’.
7 Most empirical work came from Stanford
University (in addition to Meyer & Scott, there was a
stream of papers from Jeffrey Pfeffer, Kathy
Eisenhardt and Jim Baron).
8 The idea of translation involved the movement
of ideas across organizations. An interesting parallel
is Barley’s (1986) interest in the ‘slippage’ within
organizations as individuals draw upon institutional-
ized norms to enact their roles.
9 These early studies applied a long historical
perspective on institutionalization. They were
designed around – and reinforced the notion –
that institutionalization involves long historical and
inert processes. Even though calls for more historical
studies are often heard, many of the later diffusion
studies applied a much shorter time span. This defi-
ciency means, among other things, that the long
term consequences (e.g. are they retained) of adopt-
ing new organizational elements have been largely
neglected.
10 But not always. Oliver (1988) for example,
deliberately contrasted institutional theory with pop-
ulation ecology and strategic choice theory, in order
to assess its validity (it failed the test!)
11 An excellent statement on this issue is Biggart
& Delbridge (2004).
12 Abrahamson (1991: see also, Abrahamson &
Rosenkopf, 1993) distinguished institutional from
competitive ‘bandwagon’ pressures and showed
how the latter also produces the two-stage diffusion
model from which institutionalists erroneously infer
institutional processes. Early and late adopters in the
diffusion curve can be motivated by managerial per-
ceptions of the competitive risks of non-adoption.
13 Broadly speaking, Neilson and Rao were cor-
rect. But a small number of studies did contribute to
better understanding of the reciprocal interaction
between organization and context, both at the level
of the strategic group (e.g. Porac et al., 1989), and at
the level of the organization (e.g. Barley, 1986).
14 Even the term institutionalized, however, had
subtle variations of usage. As noted here, for most
people it meant that something is taken for granted:
i.e. objectified as the natural order of things (Tolbert
& Zucker, 1995). But, in some instances, institution-
alized meant that a formal organization or rule had
35
been created (e.g. Bacharach et al., 1996; Djelic &
Quack, Chapter 11, this volume). This latter usage
clearly connects more closely to the definition of
‘institution’ as regulation.
15 An interesting application of identity theory
would be to connect institutional theory with con-
cepts of ‘celebrity firms’. Rindova, Pollock and
Hayward (2006) propose that celebrity firms (firms
that attract a high level of public attention and posi-
tive emotional appeal from being different) are
socially constructed primarily by the media, and that,
once having achieved celebrity status, a firm behaves
so as to retain that status. From our point of view,
the conferring of celebrity upon non-conforming
firms may serve to legitimate deviance and thus con-
tribute to the prospect of institutional entrepreneur-
ship and change.
16 More recent studies have extended the trans-
lation theme to the movements of ideas across
national institutions (e.g. Djelic, 1998; Sahlin-
Andersson & Engwall, 2002).
17 See J. Meyer (Chapter 34, this volume), for a
critical discussion of this development. Meyer (1996)
used the term ‘soft’ actor to emphasize actors as cul-
turally constrained and dependent.
18 Earlier, we commented upon Bourdieu’s
influence on the early institutional theorists.
Very soon direct references to his work largely
ceased, at least in North American studies. Later,
however, some of the main assumptions and results
from Bourdieu’s work on fields reappeared (e.g.
Wedlin, 2006). One such finding is that changes in
fields develop as so called pretendents – trying to
enter and exact influence over the field – challenge
dominating incumbents. Dominating actors seek
to defend the status quo and protect their own cen-
tral role in the field. This framework directs the theo-
rist’s attention to the periphery of organizational
fields as the likely source of change (cf. Bourdieu,
1977, 1984).
19 Because of its focus on translation, European
research was more inclined to view change as the
consequence of endogenous and exogenous forces.
20 A very influential work underpinning much of
this work is Power (1997).
21 This observation was reinforced by a heavily
attended 2006 conference on institutional theory
hosted by the University of Alberta, which brought
together quant jocks, interpretivists, critical theorists,
organizational theorists, strategy theorists, dis-
course analysts, ecologists, and micro-organizational
behaviour theorists, applying institutional theory to
everything from identity to political mobilization. The
most striking aspect of this conference was the rela-
tive ease and pronounced tolerance with which par-
ticipants were able to converse across widely
differing ontological assumptions, interests, and
methodologies.
36 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
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 SECTION I

Foundational Themes

Legitimacy in Organizational
Institutionalism
David L. Deephouse and Mark Suchman
INTRODUCTION
Legitimacy is a central concept in organiza-
tional institutionalism. The term ‘legiti-
macy’ dates back to the dawn of
organization theory; however, for most of
the past century, research on legitimacy
emerged only slowly and was fragmented
across several distinct social science
literatures. Since 1995, however, the body of
relevant scholarship has grown rapidly and in
a variety of directions. Much of this new
literature (like much of the literature that
preceded it) has been highly theoretical,
invoking legitimacy as an explanatory
concept rather than examining it as an empir-
ical property. Empirical accounts, to date,
have focused on exploratory case studies of
legitimacy being gained or lost, while only a
handful of investigations have employed
legitimacy as a variable in hypothesis testing.
Perhaps because of this heavy skew toward
theory development versus theory testing, the
legitimacy concept has exhibited substantial
plasticity as it has evolved from its earliest
institutionalist usages (e.g., Meyer & Rowan,
1977; Meyer & Scott, 1983). As Wright
(1985: 292) has observed, ‘the process of
1
concept formation is always simultaneously
the process of concept transformation,’ and
legitimacy has been no exception. Nonetheless,
despite its diversity, the literature on legitimacy
displays more than enough coherence and com-
monality to merit an integrative review.
This chapter is organized as follows. Our
exploration begins with an overview of past
theoretical and empirical research on legiti-
macy. This discussion includes some basic
suggestions on the dimensions, sources, and
subjects of legitimation, as well as on key
legitimation processes, antecedents and con-
sequences.1 Second, we consider the rela-
tionship between legitimacy and two other
types of social evaluation that have recently
gained prominence in organization studies,
namely status and reputation. Finally, we
conclude with several recommendations for
advancing legitimacy research in the future.
THE EVOLUTION OF
ORGANIZATIONAL LEGITIMACY
Over the years, the conceptualization and
explication of organizational legitimacy has
50 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
displayed substantial elasticity. Taken as a
whole, this elasticity has resulted in some
productive conceptual evolution but more
conceptual stretching (Osigweh, 1989). As a
result, the existing literature offers a plethora
of definitions, measures, and theoretical
propositions, not all of which are fully com-
patible with one another. While some might
argue that this intellectual thicket is overdue
for a wholesale pruning, here we limit our-
selves to the more modest task of mapping
the underlying terrain, seeking to identify
both the features that have become increas-
ingly well established and widely accepted
over time, and the features that have remained
relatively ambiguous and contested.
The development of legitimacy
theory in organizational
institutionalism
Most reviewers credit Weber with introducing
legitimacy into sociological theory and thus
into organization studies (Johnson et al., 2006;
Ruef & Scott, 1998; Suchman, 1995). Weber’s
analysis of the legitimacy of different author-
ity types is well known to many organization
theorists. More generally, however, his writ-
ings also discuss the importance of social
practice being oriented to ‘maxims’ or rules
and suggest that legitimacy can result from
conformity with both general social norms
and formal laws (Weber, 1978). Parsons
(1956, 1960) applied Weber’s ideas and
viewed legitimacy as congruence of an
organization with social laws, norms and
values. This formulation was later embraced
by many organization theorists, including
Dowling and Pfeffer (1975), Pfeffer and
Salancik (1978), and Czarniawska-Joerges
(1989). Ironically, however, the early institu-
tionalist literature was more enthusiastic in
embracing Weber’s concept than in adopting
his conceptualization. Meyer and Scott
(1983: 201), for example, commented that
the many references to Weber as a defining
account of legitimacy were ‘unfortunate,
given Weber’s lack of clarity on the point.’
New institutional theory started develop-
ing in 1977 with the articles by Meyer and
Rowan (1977) and Zucker (1977). Although
Zucker only mentioned legitimacy once in
passing, Meyer and Rowan made it a central
focus of their analysis, invoking the term at
least 43 times in some form. Their summary
graphic (1977: 353, figure 2) placed ‘legiti-
macy’ and ‘resources’ together in the same
box, and suggested that both of these
survival-enhancing outcomes may result not
only from being efficient but also from
conforming to institutionalized myths in the
organizational environment. Although
Meyer and Rowan (1977) did not offer an
explicit definition of legitimacy, they
presaged many of the dimensions explicated
in the mid-1990s by stating that legitimacy
can result from suppositions of ‘rational
effectiveness’ (later termed pragmatic legiti-
macy), ‘legal mandates’ (regulatory or
sociopolitical legitimacy), and ‘collectively
valued purposes, means, goals, etc.’ (norma-
tive or moral legitimacy). They also
highlighted how legitimacy insulates the
organization from external pressures. ‘The
incorporation of institutionalized elements
provides an account (Scott & Lyman,
1968) … that protects the organization from
having its conduct questioned. The organiza-
tion becomes, in a word, legitimate …. And
legitimacy as accepted subunits of society
protects organizations from immediate sanc-
tions for variations in technical performance’
(Meyer & Rowan, 1977: 349, 351).
In 1983, Meyer and Scott discussed legiti-
macy in much more depth, including offering
a more thorough definition:
We take the view that organizational legitimacy
refers to the degree of cultural support for an
organization – the extent to which the array of
established cultural accounts provide explanations
for its existence, functioning, and jurisdiction, and
lack or deny alternatives … In such a[n] instance,
legitimacy mainly refers to the adequacy of an
organization as theory. A completely legitimate
organization would be one about which no ques-
tion could be raised. [Every goal, mean, resource,
and control system is necessary, specified, com-
plete, and without alternative.] Perfect legitimation
 LEGITIMACY IN ORGANIZATIONAL INSTITUTIONALISM
is perfect theory, complete (i.e., without uncer-
tainty) and confronted by no alternatives (p. 201)
One noteworthy feature of this definition
is its emphasis on legitimacy’s ‘cognitive’
aspects – explanation, theorization, and the
incomprehensibility of alternatives. This
focus continues to enjoy substantial currency,
especially within neo-institutional sociology
(cf. DiMaggio & Powell, 1991).
Some theorizing expanded on Meyer and
Scott’s (1983) formulation, embracing the
basic proposition that legitimacy can be con-
ceptualized as the presence or absence of
questioning, but suggesting that questioning
is as likely to arise when a familiar organiza-
tion is unsatisfactory as when a satisfactory
organization is unfamiliar. Along these lines,
Hirsch and Andrews (1984) considered two
types of questions:
Performance challenges occur when organizations
are perceived by relevant actors as having failed
to execute the purpose for which they are char-
tered and claim support. The values they serve are
not at issue, but rather their performance in ‘deliv-
ering the goods’ and meeting the goals of their
mission are called into serious question … Value
challenges place the organization’s mission and
legitimacy for existence at issue, regardless of how
well it has fulfilled its agreed-upon goals or
function. … [Both] entail fundamental challenges
to the legitimacy of an organization’s continued
existence. Each places the target in an inherently
more unstable situation than is addressed in com-
parative or longitudinal examinations of adminis-
trative efficiency.
Pfeffer and Salancik’s foundational state-
ment of resource-dependence theory (1978)
adopted a similar ‘negative definition’ of
legitimacy, asserting that ‘Legitimacy is
known more readily when it is absent than
when it is present. When activities of an
organization are illegitimate, comments and
attacks will occur’ (1978: 194). Knoke (1985:
222) restated this in the affirmative, defining
legitimacy (in the context of political associ-
ations and interest groups) as ‘the acceptance
by the general public and by relevant elite
organizations of an association’s right to
exist and to pursue its affairs in its chosen
manner.’ The ability to pursue its own affairs
51
resonates with Child’s (1972) strategic
choice perspective, which holds that
legitimate organizations enjoy substantial
latitude to choose their structures, products,
markets, factors of production, etc. That is, a
legitimate organization has largely unques-
tioned freedom to pursue its activities:
‘legitimate status is a sine qua non for easy
access to resources, unrestricted access to
markets, and long term survival’ (Brown,
1998: 35).
In addition to offering these foundational
definitions, early legitimacy research also
built on the work of Pfeffer and Salancik
(1978) to examine how organizations gain or
lose legitimacy. Galaskiewicz (1985) found
that organizations often sought to enhance
their legitimacy by donating to charities,
forming director interlocks, and obtaining
external endorsements. Ashforth and Gibbs
(1990) proposed two general approaches,
‘substantive’ and ‘symbolic,’ and a total of
ten specific actions, many drawn from
impression management theory. They also
highlighted three purposes for legitimation
efforts: Gaining, maintaining, or defending
legitimacy. Both of Ashforth and Gibbs’ con-
tributions proved fertile: Elsbach (1994;
Elsbach & Sutton, 1992) further integrated
impression management and institutional
theories in her studies of the Act Up,
EarthFirst!, and the California cattle indus-
try; and Suchman (1995) further explored the
distinct purposes (or, as he relabeled them,
‘challenges’) of gaining, maintaining, and
repairing legitimacy.
The year 1995 could be viewed as a pivotal
point in the development of legitimacy
theory. Scott published his review book
Institutions and Organizations. He wrote:
‘Legitimacy is not a commodity to be
possessed or exchanged but a condition
reflecting cultural alignment, normative
support, or consonance with relevant rules
or laws’ (1995: 45). And Suchman published
his comprehensive ‘Managing legitimacy:
Strategic and institutional approaches’
in the 1995 Academy of Management
Review. He observed that legitimacy was
52 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
‘an anchor-point of a vastly expanded theoret-
ical apparatus addressing the normative and
cognitive forces that constrain, construct, and
empower organizational actors,’ but he also
cautioned that the existing literature provided
‘surprisingly fragile conceptual moorings.
Many researchers employ the term legitimacy,
but few define it. Further, most treatments
cover only a limited aspect …’ (1995: 571,
italics in the original). To remedy these
weaknesses, Suchman offered the following
inclusive, broad-based definition: ‘Legitimacy
is a generalized perception or assumption
that the actions of an entity are desirable,
proper, or appropriate within some socially
constructed system of norms, values, beliefs,
and definitions’ (1995: 574). Within this
scope, he delineated two basic perspectives,
an institutional view emphasizing how
constitutive societal beliefs become embed-
ded in organizations, and a strategic perspec-
tive emphasizing how legitimacy can be
managed to help achieve organizational
goals.
These two publications raised the visibility
of legitimacy, especially among management
researchers studying for-profit organizations.
Aldrich and Fiol (1994) had already high-
lighted the importance of legitimacy to entre-
preneurs, and within a few years, Kostova
and Zaheer (1999) reconsidered legitimacy
in the context of the multinational enterprise.
Meanwhile, at a more theoretical level,
Oliver (1997) drew heavily on arguments
about legitimacy to integrate institutional
theory with the resource-based view of the
firm, and Deephouse (1999) developed
strategic balance theory to address the
tension between differentiating to attain
profitability and conforming to attain legiti-
macy. This period also witnessed a sharp
upsurge in references to legitimacy with the
broader management literature. And this
heightened attention led to a number of
significant refinements in the field’s under-
standings of the dimensions, subjects, and
sources of legitimacy, as well as of the
processes, antecedents, and consequences of
legitimation.
Dimensions of legitimacy
The conceptual dimensions of legitimacy
received much attention in the mid-1990s.
Stryker (1994) distinguished between behav-
ioral consent to rules, attitudinal approval of
rules, and cognitive orientation to rules.
Aldrich and Fiol (1994: 648) distinguished
between cognitive and sociopolitical legiti-
macy. ‘Cognitive legitimation refers to the
spread of knowledge about a new venture …
Sociopolitical legitimation refers to the
process by which key stakeholders, the
general public, key opinion leaders, or
government officials accept a venture as
appropriate and right, given existing norms
and laws.’ Scott (1995), in effect, subdivided
Aldrich and Fiol’s ‘sociopolitical’ category
to arrive at three dimensions of legitimacy –
regulative, normative, and cognitive – linked
to his three pillars of institutions. Suchman
(1995) proposed a broadly similar
trichotomy using the labels ‘pragmatic,’
‘moral’ and ‘cognitive’ legitimacy;
however, he went on to combine this basic
framework with two temporal textures
(episodic versus continual) and two substan-
tive foci (organizational actions versus orga-
nizational essences), in order to arrive
at a typology containing twelve distinct legit-
imacy types: pragmatic legitimacy compris-
ing exchange, influence, interest, and
character; moral legitimacy comprising
consequences, procedures, persons, and
structures; and cognitive legitimacy compris-
ing predictability, plausibility, inevitability,
and permanence. Together, these efforts to
explicate the various dimensions of legiti-
macy allowed more researchers to become
involved in the development of institutional
theory at both theoretical and empirical
levels.
There has been some effort recently to
reconsider these dimensions. Archibald
(2004) equated sociopolitical legitimacy with
regulative legitimacy and combined norma-
tive and cognitive legitimacy in a new cate-
gory called cultural legitimacy. Cultural
legitimacy accrued over time in professional
 LEGITIMACY IN ORGANIZATIONAL INSTITUTIONALISM
and cultural contexts, whereas sociopolitical
legitimacy was more directly managed
within political contexts. Bitekhtine (2006)
began to disentangle the concepts by drawing
on one of the fundamental tools of construct
validity, the nomological network (Cronbach
& Meehl, 1955). Bansal and Clelland
(2004) brought forth a contextually focused
dimension called corporate environmental
legitimacy.
In surveying this terrain, we note two per-
sistent sources of confusion. The first centers
on the term ‘normative legitimacy.’ In gen-
eral sociological usage, ‘normative culture’
connotes the shared value premises that
structure collective assessments of the good
and the bad, that which is to be desired and
that which is to be shunned, right and wrong
(Suchman, 1997). Norms, in this sense, are
everywhere – within people, groups, organi-
zations, and social systems. Congruence with
such norms lies at the heart of legitimacy as
conceptualized by early institutional sociolo-
gists (e.g., Weber, 1978; Parsons, 1956, 1960;
see also DiMaggio & Powell, 1991); and
such norms motivate most of the ‘value chal-
lenges’ identified by Hirsch and Andrews
(1984). In contemporary organizational
institutionalism, however, ‘normative legiti-
macy’ is often equated with DiMaggio and
Powell’s (1983) concept of ‘normative iso-
morphism,’ which has come to connote not
congruence with general social values, but
rather congruence with the particular ethics
and worldviews of formal professions.2
These competing usages are highly problem-
atic. To restrict normative legitimacy to
‘professional endorsement’ marginalizes the
sorts of broader societal norms and values
that have been seen as important since
Weber. At the same time, it also marginalizes
the less normative, more instrumental and/or
cognitive aspects of professionalization.
Meyer and Scott (1983: 202), for example,
argue that professional groups, such as
‘lawyers, accountants, intellectuals,’ convey
legitimacy by virtue of their ‘collective
authority over what is acceptable theory’; but
‘acceptable theory’ involves cause and effect
53
relationships (pragmatic legitimacy), and
fundamental meanings (cognitive legiti-
macy), as well as norms and values of the
profession and the larger social system
(moral legitimacy) (cf., Greenwood, Suddaby,
& Hinings, 2002; Suchman, 1995). Perhaps
for this reason, some recent institutional
studies of professional associations
(Greenwood et al., 2002; Jones & Manev,
2002) have avoided the term normative legiti-
macy, emphasizing instead that professions
often seek to influence many different dimen-
sions of legitimacy at once. We applaud this
trend and propose that future researchers use
professional legitimacy to refer to legitimacy
conferred by professional endorsement (on
any grounds), whereas normative legitimacy
should refer to legitimacy conferred by any
audience (including but not limited to profes-
sionals) on primarily normative grounds (cf.,
Suchman, 1995, 1997).
A second significant source of confusion
in the current literature involves the nature
and measurement of the ‘taken-for-granted’
component of cognitive legitimacy. As
Aldrich and Fiol (1994: 648) note, ‘The
highest form of cognitive legitimation is
achieved when a new product, process, or
service is taken for granted.’ Taken-for-
grantedness – an absence of questioning – is
not, however, easy to measure, especially
because asking one’s research subjects about
it is, in itself, a form of questioning. One
increasingly popular measurement strategy
involves counting the number of organiza-
tions or the number of media articles, with
greater numbers indicating greater legiti-
macy (Archibald, 2004; Carroll & Hannan,
1989a; Hybels, Ryan, & Barley, 1994).
Although promising in some contexts, this
approach may be more appropriate for
emerging industries, organizations, or prac-
tices, than for more established ones. There
are fewer automobile companies and media
articles about automobile quality today than
there used to be (Abrahamson & Fairchild,
1999; Hannan, Dundon, Carroll, &
Torres, 1995), but the automobile industry
remains deeply taken-for-granted. Perhaps as
54 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
industries become increasingly established,
population counts become decoupled from
taken-for-grantedness, in part because the
taken-for-grantedness of existing firms
reduces the legitimacy of entrepreneurship
more than it reduces the legitimacy of
consolidation. Similarly, with regard to
media articles, the taken-for-grantedness of a
well-established activity may be reflected in
the complete absence of press coverage,
because the subject has blended into the
cultural landscape and is no longer seen as
requiring social scrutiny or as being
‘newsworthy’ according to prevailing jour-
nalistic practices (Itule & Anderson, 1994;
Shoemaker, 1996).
Subjects of legitimation
‘Subjects of legitimation’ are those social
entities, structures, actions, and ideas whose
acceptability is being assessed. Alternative
terms include ‘levels’ (Ruef & Scott, 1998),
‘focuses’ (Suchman, 1995: 583), or ‘objects’
of legitimation (Johnson, 2004). Here, we
use ‘subjects’ for several reasons. First, this
term is both familiar and encompassing.
Second, it reflects the idea that legitimacy
is socially constructed and emerges out of
the subject’s relation to other rules, laws,
norms, values, and cognitive frameworks
in a larger social system. Third, it serves
as a reminder that legitimacy can be quite
subjective at times, particularly when an
organization is seeking to gain or defend
legitimacy in the face of opposition
(Ashforth & Gibbs, 1990; Suchman, 1995).
Finally, subjects aren’t necessarily passive
but instead may be active in creating legiti-
macy (Ashforth & Gibbs, 1990; Suchman,
1995); examples include the European busi-
ness schools who created the legitimating
agencies that would then accredit them
(Durand & McGuire, 2005), and the Big
5 accounting firms who were actively legiti-
mating the multidisciplinary practice at the
same time that they were adapting it for use
(Greenwood et al., 2002).
The possible subjects of legitimation are
almost innumerable. Johnson (2004: 10–11)
offers a partial list, including: ‘an act, a rule,
a procedure, a routine, a distribution, a
position, a group or team, a group’s status
structure, teamwork, a system of positions,
an authority structure, an organization,
organizational symbols, an organization’s
form, practices, services, programs, a
regime, a system of power, and a system of
inequality (to name a few).’ Two additional
subjects of legitimation that have drawn
attention in management research recently
are company founders and top management
teams (Certo, 2003; Cohen & Dean, 2005;
Deeds, Mang, & Frandsen, 2004; Higgins &
Gulati, 2003, 2006). Indeed, at this point, it
appears that almost anything can be a subject
of legitimation. In the future, researchers
may face the challenge of aggregating lower-
level subjects of legitimacy in order to assess
legitimacy of a higher-level subject, such as
evaluating the legitimacy of a new venture by
the legitimacy of its products, structure, and
top management team. Such an effort may
run into the problem of aggregation, such as
described in stakeholder research (Rowley &
Berman, 2000; Wartick, 2002). Alternatively,
researchers may decide that only a limited
selection of attributes can be valid subjects of
legitimation – that is, the research community
might seek to specify legitimate subjects of
legitimation. Given the real-world complexity
and plasticity of legitimacy dynamics, how-
ever, we do not particularly advocate this
latter, artificially exclusive strategy.
Sources of legitimacy
‘Sources of legitimacy’ are the internal and
external audiences who observe organiza-
tions and make legitimacy assessments (Ruef
& Scott, 1998: 880). Meyer and Scott (1983:
201–2) focused on those ‘who have the
capacity to mobilize and confront the organ-
ization,’ not so much in terms of power but in
authority over cultural theory. They classified
these sources into two basic groups. The first
 LEGITIMACY IN ORGANIZATIONAL INSTITUTIONALISM
are those who ‘have standing and license,
derived from the organization’s legitimating
account of itself’, most commonly the State.
The second are those who have collective
authority over what is acceptable theory
(e.g., lawyers, accountants, intellectuals).
These may not be the only relevant sources,
however. In Suchman’s definition (1995:
574), legitimacy implies congruence with
‘some socially constructed system of norms,
values, beliefs, and definitions,’ but, as the
word ‘some’ suggests, the possible sources of
such legitimating accounts are not
inherently restricted to any fixed set of
gatekeepers. Thus, a central issue for legiti-
macy research is identifying who has collec-
tive authority over legitimation in any given
setting. The answer depends to a large extent
on the focus of the research question. For
instance, when Suddaby and Greenwood
(2005) examined the debate between the US
law and accounting professions about what a
professional services firm should be, the
issue was fairly specialized and the social
system narrowly drawn. In contrast, an
examination of the legitimacy of the global
energy industry after the Exxon Valdez oil
spill would need to encompass popular
opinion, state regulators, industry analysts,
political activists, and expert ‘epistemic com-
munities’ (Adler & Haas, 1992) throughout
the world system.
Many researchers have finessed these dis-
tinctions by treating society-at-large as a
source of legitimacy, especially over long
periods of time. This approach is particularly
common in institutional studies of diffusion
(e.g., Strang & Soule, 1998; Tolbert &
Zucker, 1983), which build on the linkage
between cognitive legitimacy and mimetic
isomorphism3 to argue that the more
numerous the adopters of a practice, the
more widespread its acceptance and the
greater its legitimacy. Similarly, ‘density
dependence’ research in organizational
ecology has treated the number of organi-
zations in a population as a determinant
of the organizational form’s legitimacy
within the external social environment.
55
Empirical support for this relationship has
been found in many organizational forms,
such as newspapers, automobiles, and British
motorcycle manufacturers (Carroll &
Hannan, 1989a; Hannan & Carroll, 1992;
Hannan et al., 1995; Wezel, 2005). Although
some institutionalists (e.g., Zucker, 1989;
Baum & Powell, 1995) argued that density
fails to capture the richness of the institu-
tional environment, Carroll and Hannan
(1989a, b), Hannan and Carroll (1995) and
Hannan et al. (1995) rebutted that density is
a parsimonious indicator of legitimacy that
enjoys predictive validity for a remarkably
wide array of organizational populations.
Other researchers in both the institutionalist
and ecological camps responded by incorpo-
rating additional indicators of society-wide
legitimacy, most notably time-period vari-
ables based on institutional regime changes
or stages of the adoption cycle (e.g., Arthur,
2003; Ruef & Scott, 1998). For further dis-
cussion of these developments, see the
companion Chapter 2 by Boxenbaum and
Jonsson and 24 by Haveman in this volume.
Somewhere between specific legitimacy-
granting authorities and society-at-large as a
source of legitimacy stand the media. As
suggested by Baum and Powell (1995; see
also Dowling & Pfeffer, 1975), the media
are one institutionally rich indicator of
society-wide legitimacy, and researchers
have been working with media data since the
1990s. At the population level of analysis,
Hybels, Ryan, and Barley (1994) measured
the legitimacy of the US biotech population
by counting newspaper articles about the
population in each year. Concurrently,
Deephouse (1996) used media data to
measure the public legitimacy of individual
organizations in the financial sector. Media
reports were subsequently used to measure
legitimacy by Lamertz and Baum (1998),
Abrahamson and Fairchild (1999), Pollock
and Rindova (2003), Bansal and Clelland
(2004), and Deeds et al. (2004), etc.
However, as Deephouse (1996) pointed out,
evidence from journalism and mass commu-
nications strongly suggests that media
56 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
reports not only reflect but also influence the
opinion of the general public (Fombrun &
Shanley, 1990; McCombs & Shaw, 1972;
Schramm, 1949). Thus, the media should
rightfully play a dual role in legitimacy
research, serving both as an indicator of
legitimation by sociey-at-large and as a
source of legitimacy in their own stead.
This duality is particularly noteworthy in
the case of ‘prestige media,’ such as The
New York Times or The Wall Street Journal,
which have figured prominently in legiti-
macy studies. Empirically, prestige media
provide appealing indicators of society-wide
legitimacy because they are now readily
available in electronic form, reducing the
often prohibitive burden of selecting and
coding a media sample (Carroll, 2004;
Conway, 2006). Their presence in libraries
makes them amenable to historical research
(Mezias & Boyle, 2005). Theoretically, how-
ever, prestige media are particularly likely to
influence that which they are taken as meas-
uring, because they are produced by and for
societal elites, aspirants to elite status, and
other participants in the cultural mainstream.
Prestige media often set the agenda for less
prestigious media outlets (Boyle, 2001;
Gans, 1979), and they are routinely targeted
by organizations and institutional entrepre-
neurs seeking to build or repair legitimacy.
Further, with a few significant exceptions,
prestige media tend to be culturally conser-
vative, acting as a stabilizing force in society,
and perhaps exacerbating the disparities
between legitimate and illegitimate actors
(e.g., Gitlin, 1980).
Beyond society-at-large and the media, a
third often-mentioned source of legitimacy
derives from interorganizational relations: A
subject becomes legitimate when it is con-
nected to legitimate others (Galaskiewicz,
1985). Pfeffer and Salancik (1978), for
example, explain how the American Institute
for Foreign Study burnished its legitimacy by
obtaining endorsements from prominent
political figures. And in perhaps the first sta-
tistical study of organizational legitimacy,
Singh, Tucker, and House (1986) measured
the legitimacy of a voluntary social service
organization by whether it was listed in the
community directory of Metropolitan
Toronto, registered as a bona fide charity
with Revenue Canada, and endowed with a
large (and therefore presumably interorgani-
zationally embedded) board of directors.
Later papers enumerated similar connections
to government, industry leaders, and other
authorities in the institutional environment
(Baum & Oliver, 1991; Baum & Oliver,
1992; D’Aunno, Sutton, & Price, 1991).
Thus, charitable donations, interlocking
directorships, and strategic alliances with
prestigious partners have all been identified
as important sources of legitimacy for the
firms involved (Cohen & Dean, 2005; Deeds
et al., 2004; Galaskiewicz, 1985; Higgins
& Gulati, 2003, 2006; Miles, 1982; Oliver,
2001).
Three important interrelated issues emerge
from this review of the sources of legitimacy.
The first is a recognition that many common
sources of legitimacy are themselves organi-
zations. For instance, regulatory legitimacy
results from rulemaking and enforcement
activities within the agencies of the State.
Legitimacy-enhancing interorganizational
relationships, too, arise from decisions by
other organizations to affiliate with the
subject entity. And media stories, whether
legitimating or de-legitimating, do not appear
out of a vacuum, but instead are produced
by organizations, as Hirsch (1977) reminded
us thirty years ago. Thus, the granting of
legitimacy is as amenable to organizational
analysis as is the pursuit.
We frame the second issue as a question:
Are there legitimate sources of legitimacy?
This depends in part on the research question
and the social system(s) of interest. Consider
whether organized crime or official
corruption is legitimate. Jepperson (1991:
149) stated that some elements, such as
fraud, bribery, organized crime, and political
corruption, can be institutionalized without
being legitimate. Nonetheless, within some
social systems, be they networks of
organized criminals or particular national
 LEGITIMACY IN ORGANIZATIONAL INSTITUTIONALISM
polities, even these ‘social pathologies’ may
in fact be accepted as legitimate – certainly in
the pragmatic sense of being seen as useful
and the cognitive sense of being taken-
for-granted, and at least occasionally in the
moral sense of being ethically permitted, as
well. Thus, an individual might be willing to
bribe a police officer in one nation but not
another, and an organization might be willing
to bribe a regulator in one nation but not
another. The legitimacy of criminal
punishment varies; for instance, many
jurisdictions ban capital punishment. One
group’s terrorist is often another group’s
freedom fighter. Given this ‘legal pluralism’
(Merry, 1988), can researchers meaningfully
distinguish between conventionally legiti-
mate sources such as public authorities and
formal professions (the two groups listed
by Meyer and Scott, 1983) and unconven-
tional but often potent competitors such as
criminal underworlds, ethnic enclaves, and
rejectionist sects?
The third issue is the nature of the assess-
ments that sources make in determining
whether to grant or withhold legitimacy.
Most statistical studies focus on the pres-
ence, absence or intensity of support from
any given source. But while it may be fairly
clear that the presence of an endorsement or
the occurrence of an adoption implies
support (Galaskiewicz, 1985; Hannan &
Carroll, 1992; Tolbert & Zucker, 1983), what
does the absence of an endorsement or an
adoption indicate? In some cases, such as
charitable registration in an organizational
field where non-profit status matters and
registration is open to all, unregistered
organizations would certainly appear to lack
legitimacy (Baum & Oliver, 1991; Baum &
Oliver, 1992; Singh et al., 1986). In contrast,
the absence of a board interlock with a
prestigious firm conveys much less informa-
tion about whether the subject organization is
acceptable, desirable, or culturally
supported, except perhaps from the perspec-
tive of the prestigious firm.
Some researchers focus on negative
assessments – questions, challenges, and
57
rejections – rather than on positive accounts,
endorsements and adoptions (Hirsch &
Andrews, 1984; Meyer & Scott, 1983). Many
case studies, for example, examine organiza-
tions such as Nike and Exxon that have faced
legitimacy challenges. Deephouse (1996)
was perhaps the first to apply this approach
in statistical research by measuring the extent
to which commercial banks were constrained
by regulators and challenged in the media.
One of his measures was the presence of a
regulatory decision that explicitly limited the
strategic choices of the bank in question. For
this approach, the absence of legitimacy
challenges is an indicator of whether the
organization is ‘accepted’ in the sense of
being left to pursue its activities without
interference from cultural authorities.
However, the presence of questioning may
sometimes be as ambiguous as the absence of
endorsement, given that in some domains
(academic meetings and presidential press
conferences come to mind) questioning can
be a ritualized display of attentiveness rather
than a genuine challenge to legitimacy.
We close our discussion of legitimacy
sources with a statement from the resource-
dependence perspective: ‘We suspect that
legitimacy need not be conferred by a large
segment of society for the organization (or
subject) to prosper.’ (Pfeffer & Salancik,
1978: 194). The survival of many structures,
organizations and organizational forms
without ringing cultural endorsement
suggests that there may be some truth to this.
But in the absence of broad-based cultural
support, the characteristics of those particu-
lar sources that do grant endorsement may
matter quite a bit.
Legitimation
Generalizing from Maurer (1971), Ashforth
and Gibbs (1990), and Walker and Zelditch
(1993), (de-)legitimation is the process by
which the legitimacy of a subject changes
over time. Following Van de Ven (1992), we
use the term process narrowly as the order or
58 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
sequence in which things happen. The more
general use of the term process includes a set
of explanations for explaining a variance
theory and as a category of concepts; these
are discussed elsewhere in this and other
reviews.
Legitimation is closely related to diffusion
and institutionalization, and there is
sufficient research to specify a general
process. For instance, Johnson et al. (2006)
integrated research in social psychology and
organizational sociology to develop a
four-stage model of legitimation consisting
of innovation, local validation, diffusion, and
general validation. In general, we expect the
dynamics of legitimation to parallel those
of institutionalization (Lawrence, Winn, &
Jennings, 2001), but exceptions to our
expectations may make interesting case
studies. Moreover, there is greater need for
research on the order in which different
sources confer legitimacy and the different
dimensions of legitimacy are conferred.
A notable example of this is by Greenwood
et al. (2002). They offered a six-stage model
of institutional change in highly profession-
alized fields. They proposed that moral and
pragmatic legitimacy was theorized in stages
four and five and cognitive legitimacy
occurred in stage six.
Antecedents of legitimacy
Meyer and Rowan (1977) suggest that both
technical efficiency and conformity to insti-
tutional myths can be precursors of legiti-
macy.4 Deephouse (1996) was perhaps the
first to test these relationships directly. He
found that conformity and efficiency
increased banks’ legitimacy in the eyes of
regulators, consistent with the regulators’
interest in the stability of the banking system;
in contrast, he found that only conformity
had a positive effect on legitimacy in the eyes
of the media, assumed to be both a leader and
a recorder of the public’s norms and values
(Dowling & Pfeffer, 1975; Fombrun
& Shanley, 1990). Similarly, Westphal et al.
(1997) found that conformity to Total
Quality Management practices enhanced the
likelihood that a hospital would earn
endorsement from the Joint Commission on
Accreditation of Healthcare Organizations
(JCAHO), a major source of legitimacy in
the US healthcare sector. And Glynn and
Abzug (2002) found that conformity in orga-
nizational names increased their under-
standibility to a wide range of business and
non-business audiences. Findings like these
reinforce Suchman’s (1995: 587) prescrip-
tion that the best way to gain legitimacy is
often simply to ‘conform to environments.’
Suchman, however, also notes that
organizations sometimes gain legitimacy by
manipulating, rather than conforming to,
environments. Along these lines, a large
number of studies have examined how texts,
generally construed, can be used to gain
legitimacy for some subjects and challenge
the legitimacy of other subjects (Phillips,
Lawrence, & Hardy, 2004). In an early study
of organizational impression management,
for example, Elsbach (1994) found that
accounts that acknowledge failings or make
reference to the institutional environment are
superior to accounts that deny responsibility
or make reference to the technical
environment. More recently, Suddaby and
Greenwood (2005) examined the discursive
struggle between proponents and opponents
of multidisciplinary partnerships in profes-
sional services, and Vaara, Tienari, and
Laurila (2006) identified five ‘discursive
legitimation’ strategies, which they labeled
normalization, authorization, rationalization,
moralization, and narrativization.
Consequences of legitimacy
The consequences of legitimacy have
also received considerable attention. At least
since Meyer and Rowan (1977: 353), institu-
tionalists have argued that legitimacy
enhances organizational survival. Supportive
evidence abounds: Legitimacy measured
by endorsements and interorganizational
 LEGITIMACY IN ORGANIZATIONAL INSTITUTIONALISM
relationships increased survival rates among
Toronto non-profits (Baum & Oliver, 1991,
1992; Singh et al., 1986), and both manage-
rial and technical legitimacy reduced exit
rates for US hospitals (Ruef & Scott, 1998).
Organizational ecology, too, has lent support
to this claim, finding that legitimacy (meas-
ured by the density of firms in an industry)
increases survival rates across a wide range
of organizational populations (Hannan &
Carroll, 1992).
Other, more proximate consequences have
been examined as well. The strategic view of
legitimacy sees it as something that can be
manipulated to achieve organizational goals
(Suchman, 1995), and researchers have long
posited that ‘[l]egitimacy affects the compe-
tition for resources,’ (Pfeffer & Salancik,
1978: 201; see also Parsons, 1960). More
recently, as an interest in legitimacy has
spread into the strategic management litera-
ture, researchers have developed and tested
hypotheses predicting how various types of
legitimacy would affect other performance
measures, such as the value of initial public
offerings (IPOs) (Cohen & Dean, 2005;
Deeds et al., 2004; Higgins & Gulati, 2006;
Pollock & Rindova, 2003), stock prices
(Zuckerman, 2000), stock market risk
(Bansal & Clelland, 2004), and stakeholder
support (Choi & Shepherd, 2005).
Summary
As the preceding discussion demonstrates,
research on legitimacy has expanded in many
directions over the past three decades. Initial
concern with the effect of legitimacy on sur-
vival has expanded to include effects on other
types of organizational success. Legitimacy
has been dimensionalized into as many as
twelve types, and the recognized sources of
legitimacy have been extended well beyond
the two enumerated by Meyer and Scott
(1983) – those with standing and license and
those with authority over what constitutes
acceptable theory. These developments have
created opportunities for a wide variety of
59
legitimacy studies. Legitimacy continues to
appear most frequently in theoretical analy-
ses; however, the number of descriptive case
studies has increased substantially, and efforts
at confirmatory hypothesis testing (although
still relatively rare) seem to be on the rise.
LEGITIMACY AND OTHER SOCIAL
EVALUATIONS
These developments have brought legitimacy
research into overlap with a variety of other
ways of describing the social evaluation of
organizations. In recent years, the most
prominent of these kindred concepts have
been ‘status’ (e.g., Podolny, 1993; Phillips &
Zuckerman, 2001) and ‘reputation’ (Fombrun
& Shanley, 1990; Fombrun, 1996). Although
a full synthesis of these largely independent
literatures would go well beyond the scope of
the present chapter, one might productively
ponder to what extent and in what ways legit-
imacy, status, and reputation are either equiv-
alent or distinct. In this section, we briefly
compare and contrast what we see as the key
connotations of each term.
Definitions and distinctions
The definitions of status and reputation are at
least as diverse, ambiguous, and contested as
the definition of legitimacy. We will explore
some of the sources of this ambiguity and
contestation below, but as provisional work-
ing definitions, we offer the following,
adapted from the literature:
– Status is ‘a socially constructed, intersubjectively
agreed-upon and accepted ordering or ranking’
of social actors (Washington & Zajac, 2005: 284),
based on the esteem or deference that each actor
can claim by virtue of the actor’s membership in
a group or groups with distinctive practices,
values, traits, capacities or inherent worth (cf.,
Benjamin & Podolny, 1999; Weber, 1946).5
– Reputation is a generalized expectation about a
firm’s future behavior or performance based on
60 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
collective perceptions (either direct or, more
often, vicarious) of past behavior or performance
(cf., Ferguson, Deephouse, & Ferguson, 2000;
Fombrun, 1996; Rindova et al., 2005).6
To illustrate the potential for overlap among
legitimacy, status, and reputation, consider
the following two examples from recent
empirical research: Higgins and Gulati
(2003) report that the prior job histories of a
firm’s upper echelon employees, such as
affiliations with certain prominent industries
like pharmaceuticals, increase the likelihood
that the firm can garner endorsements from
leading investment banks; Deeds et al.
(2004) similarly report that US high tech
firms with founders or managers from top ten
research universities and Master of Business
Administration (MBA) programs receive
higher IPO valuations. In both studies, the
employee-background variables are charac-
terized as measures of legitimacy – a plausi-
ble claim, given that past affiliations could
indicate managerial competence and hence
pragmatic legitimacy, managerial propriety
and hence moral legitimacy, or managerial
conventionality and hence cognitive legiti-
macy. But prominence and prestige are also
often associated with status; and a track
record of experience, training and visibility
might easily foster reputation. Is the choice
among these labels merely stylistic, or do
their implications differ?
Certainly, the literatures on legitimacy,
status, and reputation have many traits in
common. They all focus on cultural factors in
organizational life. They all suggest that
organizations can garner resources by
conforming to prevailing social norms. And
they all emphasize that ‘objective’ perform-
ance criteria are not always salient or even
evident, and that organizational behaviours
may be social signals as well as technical
operations. Thus, all three literatures depict
social perceptions of conformity as being
central determinants of organizational
success. Moreover, all three recognize that
organizations can create such ‘social percep-
tions of conformity’ in at least three different
ways: by embracing and internalizing norms;
by obeying norms instrumentally as long as
the benefits of doing so exceed the costs; and
by cynically displaying the outward indicia
of conformity, while making as few substan-
tive accommodations as possible. Thus, all
three literatures also, at least implicitly,
engage two central questions: (a) how
successful can cynical displays of conformity
be, absent internalization?7 and (b) to what
extent does surface conformity lead over
time to internalization, despite initial
cynicism? Fundamentally, to what extent can
legitimacy, status, or reputation, be feigned
without either being internalized by organi-
zational participants or being discovered by
curious outsiders, such as competitors, the
media, or the state?
The similarities between these literatures
arise because legitimacy, status, and reputa-
tion share many antecedents, consequences,
measures, and processes. Indeed, one could
no doubt find instances in the prior literature
where different authors use different mixes
of the three terms for essentially the same
empirical referents. Given this, any progress
toward precision and parsimony will
inevitably come at the cost of contradicting
at least some prior usages; we doubt that
anyone could prune this conceptual thicket
while leaving every branch fully intact.
Nonetheless, we believe that researchers
throughout these intertwined literatures
would benefit from clarifying and, where
possible, disentangling the three focal
concepts. Juxtaposing legitimacy, status, and
reputation reveals important connotations of
each that would remain largely invisible if
the three were considered only in isolation.8
Goring our own oxen first, we can begin
by suggesting that legitimacy, in contrast
to status and reputation, is fundamen-
tally dichotomous. Despite some usages to
the contrary (see below), legitimation is
largely a question of ‘satisficing’ to
an acceptable level, and the absence of
negative ‘problems’ is more important
than the presence of positive achievements.
Legitimacy is also fundamentally non-rival:
it is rarely a zero-sum game within any given
 LEGITIMACY IN ORGANIZATIONAL INSTITUTIONALISM
population; indeed, positive feedback loops
and a ‘logic of confidence’ (Meyer &
Rowan, 1977) tend to produce win-win
ceremonies of mutual affirmation among
legitimate actors. Further, legitimacy is
fundamentally homogenizing, producing
herd-like conformity along whichever
dimensions the prevailing rational myths
establish as legitimacy-defining. Further,
precisely because legitimacy is non-rival
and homogenizing, it paints with a broad
brush and tends to attach to all entities that
share a given form. Although firms, struc-
tures and even individuals can achieve
legitimacy on their own, the more common
pattern is for each instance to be legitimated
by conformity with a collectively legitimated
template.9 Finally, legitimacy is fundamen-
tally political. Because it is linked to
authority, legitimacy generally produces a
taken-for-granted right to act and command
within a particular sphere of activity. This
political aspect is embedded within the
etymological roots of legitimacy in the Latin
lex or legis, meaning law. It is also consistent
with the central place of the state – as both
licensor and enforcer – in much legitimacy
research. Indeed, state certification is
arguably the core archetype of legitimation,
to which most other legitimation mecha-
nisms are linked by either implication or
analogy.
Status reflects the relative position of
social groups within a hierarchy of collective
honour (cf., Weber, 1946). Consequently, in
contrast to legitimacy, status is fundamen-
tally ordinal and categorical, varying less
within groups than across groups. This
allows empirical distinctions between,
for example, the upper-, middle-, and lower-
status tiers in an industry (Podolny, 1993;
Deephouse & Carter, 2005; Phillips &
Zuckerman, 2001). Further, whereas legiti-
macy is fundamentally non-rival, status is
fundamentally ‘group-rival.’ That is, status is
positive sum within status groups, but
negative sum across groups. Groups compete
for status through solidarity displays,
collective mobility projects, and out-group
61
ostracism, and individuals move between
groups primarily through sponsorship, not
competitive performance. From this, it
follows that, whereas legitimacy is
fundamentally homogenizing, status is fun-
damentally segregating: Lower-status groups
tend to imitate higher-status groups as a way
of earning group honour; however, higher-
status groups tend to jettison status markers
as soon as those markers become contami-
nated by imitation. Significantly, because
status is group-rival and segregating, it tends
to attach to self-aware cliques or ‘status
groups,’ rather than to individual social
actors or entire populations. Entry into these
cliques is usually based on a mixture of
ascription and achievement (or, one might
say, legitimacy and reputation), but entry is
more a matter of favor than dessert –
objective performance and legitimacy in the
eyes of outsiders matter far less than accept-
ance by the status group itself. Finally, status
is fundamentally honorific; it reflects cultural
capital and habitus (Bourdieu, 1986), and it
elicits deference and tribute: ‘Status gener-
ates social esteem and special, unearned (i.e.,
non-merit-based) benefits known as privi-
leges, which are granted to and enjoyed by
high-status actors in a social system’
(Washington & Zajac, 2005: 284). Status
also implies an ability to valorize (or contam-
inate) by association – as illustrated by
admission into an elite club, or rejection by
the ‘in’ crowd.
More so than either legitimacy or status,
reputation involves an explicit extrapolation
from past to future behavior. Thus, strictly
speaking, reputations can be as multidimen-
sional and idiosyncratic as the behaviors
that they summarize.10 Certainly, reputation
can extend beyond product and ser-
vice quality (the focus of most economic
discussions of reputation), to include being a
tough competitor, a good place to work, an
environmentally sensitive manufacturer, etc.
(e.g., Shapiro, 1983; Weigelt & Camerer,
1988; Benjamin & Podolny, 1999; Carter &
Deephouse, 1999; Washington & Zajac, 2005;
Rindova, Pollock, & Hayward, 2006).
62 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Nonetheless, in contrast to both legitimacy
and status, reputation is fundamentally a con-
tinuous measure, placing each actor on a
continuum from best to worst – or, more
often, on many such continua. As a ranking
of actors, reputation is fundamentally rival:
On any given continuum, reputation is con-
tingent on relative standing, and hence a
firm’s position can usually only increase
at the expense of competitors. Reputation
is also fundamentally differentiating:
Reputation dynamics encourage organiza-
tions to distinguish themselves from their
peers either substantively or by advancing
claims to uniqueness, often despite
minimal outward differences. Because
reputation is rival and differentiating, it tends
to attach to individual actors, ranking each
firm even when the distinctions involved are
substantively trivial.11 Finally, if legitimacy
is political and status is honorific, reputation
is fundamentally economic: In effect, reputa-
tion becomes an input into potential
exchange partners’ expected utility functions.
Given that boundedly rational actors can
never know the actual outcomes of transac-
tions in advance, would-be exchange
partners must turn to reputation in order to
map one another’s past performances onto
present preferences. This means that favor-
able reputation is often a strategic resource
that firms can exploit for competitive advan-
tage (cf., Barney, 1991; Deephouse, 2000;
Roberts & Dowling, 2002).
Confusions and conflations
Despite these differences in connotation, the
prior literature frequently confuses and
conflates legitimacy with both status and rep-
utation.12 One common source of difficulty is
reflected in the recurrence of phrases like
‘more (or less) legitimate’: In the past,
researchers have often treated legitimacy as a
continuous variable, obscuring an important
distinction between legitimacy and both
status and reputation. The sources of this
usage are two-fold: First, despite being
fundamentally dichotomous, legitimacy can
appear continuous (or at least ordinal) by
virtue of what might be termed ‘pointalism’:
Because legitimacy is always assessed by
multiple audiences and with respect to
multiple activities, an organization can
become ‘more legitimate’ by becoming legit-
imate to more audiences in more of its activ-
ities. Second, legitimacy can vary in its
certainty and security. Thus, a firm can
become ‘more legitimate’ by becoming more
clearly legitimate, more firmly legitimate, or
both.
Another source of confusion involves the
assertion that legitimacy is fundamentally a
property of forms or populations, rather than
of self-defined groups (à la status) or individ-
ual firms ( à la reputation). A casual perusal
of the empirical literature would turn up
many instances when this assertion seems
not to hold, and when legitimacy, instead,
appears quite similar to group-level status or
firm-level reputation. Upon closer inspec-
tion, however, most of these counter-exam-
ples prove to be special cases, such as when
a form has only one real-world instantiation
(e.g., the United Nations) or when a group
erects such high status barriers that it
becomes virtually a population unto itself,
incommensurable with other organizations in
its domain (e.g., the ‘Big 8, 6, 5, or 4’
accounting firms). Moreover, even in these
special cases, legitimacy’s underlying conno-
tation of being a population-level property
seeps through: One hallmark of legitimacy is
the (mythological) assumption that legitima-
tion arises from alignment with universal
principles, rather than from the idiosyncratic,
culturally-specific maneuverings of a partic-
ular firm or group of firms; hence, in claim-
ing legitimacy, unique entities tend to present
themselves as exemplars of an abstract form,
even if they are the only exemplar in
existence. (An attack on the UN becomes an
attack on world government; an appeal for
the international space station becomes a
tribute to the human spirit of exploration.)
A third cause of confusion is the fact that
observers (both academics and practitioners)
 LEGITIMACY IN ORGANIZATIONAL INSTITUTIONALISM
often rely on overlapping information inputs
to assess legitimacy, reputation, and status.
Sometimes these inputs are simply too
generic and multivocal to be characterized as
indicators of one form of social evaluation
versus another. This, for example, is clearly
true of charitable donations and directorship
interlocks, two of the most common legiti-
macy/status/reputation measures in organiza-
tion studies (Davis & Greve, 1997; Fombrun,
1996; Galaskiewicz, 1985). But even when
well-established ‘reputational intermedi-
aries’ purport to be distilling objective data
about past performance (as is the case, for
example, in the US News and World Report
rankings of educational programs), confla-
tion remains almost inevitable (cf., Sauder
& Lancaster, 2006). Evaluators, like all
social actors, have cognitive limitations
(Simon, 1976), and as a result, unique,
infinitely multidimensional reputations get
reduced, in practice, to a small number of
socially constructed ranking criteria. And
significantly, both the choice of criteria and
the methods of measurement are heavily
shaped by the same institutional logics and
honor-markers that determine legitimacy and
status.
A fourth reason for confusion is that legit-
imacy, reputation, and status are all related to
success. As discussed above, each of these
favorable social evaluations can enhance per-
formance: Legitimacy can be crucial to gar-
nering resources from external audiences, to
commanding the loyalty of internal partici-
pants, and (in its cognitive forms) to avoiding
misunderstandings and miscues among
external and internal constituencies alike.
Copious evidence also links status to success.
For instance, Benjamin and Podolny (1999)
found that the status of a winery led to higher
prices, even after controlling for the winery’s
product quality.
And the impact of reputation on subse-
quent outcomes has been well-known, at
least since Merton (1968) famously identified
the ‘Matthew Effect’ in the sociology of
science.13 In organizational studies, research
on the resource-based view of the firm has
63
frequently identified a favorable reputation
as a resource that can yield significant com-
petitive advantages (e.g., Barney, 1991;
Deephouse, 2000; Roberts & Dowling,
2002).
The situation becomes more complicated,
however, when one reverses the causal arrow,
to make success an independent rather than a
dependent variable. Reputation, legitimacy
and status can each be bolstered by success-
ful performance – but in decidedly different
ways. Success enhances reputation directly,
by demonstrating an ability to perform.
Indeed, the link between past performance
and future potential is arguably reputation’s
defining element. Success enhances
legitimacy, too, but mostly indirectly:
Success often signals cultural acceptance and
an ability to deliver on commitments, both
of which affect whether an organization
can sustain a self-confirming ‘logic of
confidence’ (Meyer & Rowan, 1977). But
success, in itself, is not enough. Legitimacy
rarely attaches to organizational forms, such
as criminal gangs or ‘pirate’ radio stations,
that ‘succeed’ in culturally inappropriate
endeavors or by taking short-cuts around
culturally prescribed practices. Finally,
while success may enhance status as well, it
does so only obliquely at best. Success may
provide currency (literal or figurative) for
procuring the indicia of status-group mem-
bership; but status groups tend to be resistant
to the success of arrivistes, interposing new
bases of distinction (i.e., ‘moving the bar’)
in order to maintain group boundaries
(Weber, 1946). Given these different
mechanisms, the relative impact of success
on reputation, legitimacy, and status may
vary. For instance, Deephouse and Carter
(2005: 355) showed that financial perform-
ance had a stronger effect on reputation than
it did on legitimacy.
Figure 1.1 depicts our nested conceptual-
ization of legitimacy, reputation, and status,
and their relationships to resource flows.
Stakeholders (on the left) exchange resources
with organizations in a focal industry,
population, or sector (on the right); the lines
64 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM

Stakeholders Resource flows Organizations

R1,H,L, R2,H,L... High status

R1,M,L, R2,M,L... Middle status Legitimate

organizations

R1,L,L, R2,L,L... Low status

R1,H,I, R2,H,I... High status

Illegitimate
R1,M,I, R2,M,I... Middle status organizations

R1,L,I, R2,L,I... Low status

Ri,S,L denotes reputation of organization i in status group S in legitimacy class L

Figure 1.1 The effects of legitimacy, reputation, and status on resource flows between
stakeholders and organizations

represent bi-directional resource flows of
inducements and contributions, such as
employee effort and compensation (Barnard,
1938: 94; March & Simon, 1958: 84).14 For
illustrative purposes, we can group stake-
holders dichotomously, although stakeholder
research offers ample evidence of more fine-
grained differentiation (Clarkson, 1995;
Mitchell, Agle, & Wood, 1997). Consistent
with our discussion above, organizations in
the figure are grouped into two legitimacy
classes (legitimate and illegitimate), and
within each class organizations are clustered
by status (high, medium, and low). In addi-
tion, each organization possesses a unique
reputation, subscripted by the organization’s
rank within its legitimacy and status cohort.
The essence of the figure is that certain
stakeholders will exchange resources only
with legitimate organizations and will not
engage in transactions with others. In other
words, no matter what the components of the
marketing mix illegitimate organizations
offer, a substantial group of stakeholders will
not transact with them. Thus, as many
authors have suggested in the past, legiti-
macy affects market access: ‘An organization
which can convince relevant publics that its
competitors are not legitimate can eliminate
some competition’ (Pfeffer & Salancik,
1978: 194; see also Brown, 1994, 1998;
Deephouse & Carter, 2005). A few examples
may be enlightening: One is gambling,
divided into state-sanctioned and other
forms. Many customers who would happily
buy a state lottery ticket would never con-
sider placing wagers with a bookie, even at
substantially more favorable odds. Another
example is petroleum marketing. Certain
stakeholders who are concerned about the
environment may refuse to patronize Exxon
and Shell in reaction to the Exxon Valdez and
 LEGITIMACY IN ORGANIZATIONAL INSTITUTIONALISM
Brent Spar incidents, although some of those
same stakeholders may have forgotten less
de-legitimating accidents caused by other
producers. A third example comes from the
British Columbia forestry industry, where the
province recently decided to grant timber
access only to contractors who could demon-
strate acceptable safety standards, not only in
their own operations but also in the opera-
tions of their sub-contractors. In announcing
the new policy, the provincial Forests
Minister nicely captured the importance
of legitimacy for market access: ‘no one is
going to get one of those tenders unless they
have safety procedures applied through their
operation … they are a safe company
and they meet our standards.’ (Kennedy,
2006: S3).
As Figure 1.1 suggests, each legitimacy
class may contain several status groups. For
visual simplicity, we depict a simple ‘low,’
‘medium,’ and ‘high’ division. This tri-
chotomy is fairly common in the recent
status literature, and for some industries,
such as automobile manufacturing, these
three broad status groups may suffice. In
other industries, however, status distinctions
are likely to be much more fine-grained; for
instance, Benjamin and Podolny (1999: 574)
identified 41 distinct status groups among
California wineries. Although not illustrated
in the figure, stakeholders may also be
divided into status groups. When this is the
case, and when organizations and stakehold-
ers recognize one another’s status hierar-
chies, entities in each population may seek to
avoid contamination by limiting their contact
with lower status entities in the other.
This dynamic tends to reproduce the status
hierarchies on both sides of the exchange.
Within any given status group, each organ-
ization has a reputation based on many
dimensions, such as product quality, work-
place practices, community involvement, etc.
(Fombrun, 1996). In the case of winemaking,
such components might include a reputation
for producing award-winning wine, for being
a good place to work, for having great winery
tours, or for donating generously to charities.
65
(Home winemakers who sell their product
outside of state-licensed facilities might
exemplify an illegitimate group, with limited
market access regardless of either reputation
or status.) In general, within a legitimacy
class and status group, stakeholders will
favor those organizations with the strongest
reputations. The literature suggests at least
two noteworthy caveats, however: First,
some stakeholders may have idiosyncratic
preferences, leading them to weight certain
aspects of reputation differently from the
norm among stakeholders as a whole; this
allows organizations to adopt niche strategies
that cater to specific subsets of the stake-
holder pool. Second, stakeholders will often
give more credence to (or be more cognizant
of) reputational hierarchies within ‘core’
versus ‘peripheral’groups; this suggests that
the impact of reputation may be moderated
by legitimacy and status, such that legiti-
mate, high-status actors will enjoy the great-
est returns on their past achievements (cf.,
Phillips & Zuckerman, 2007; Beck, Horan, &
Tolbert, 1978).
As the preceding paragraphs suggest, the
interrelationships among legitimacy, status,
and reputation offer numerous research
opportunities. One empirical approach would
be to cross-classify legitimacy classes
(e.g., Yes/No), status groups (e.g., High/
Middle/Low) and reputational ranks (e.g.,
High/Low), and then examine the size, char-
acteristics, and consequences of each of the
resulting 12 categories. Past research has
adopted essentially this approach: For
instance, studies of top business schools
suggest that this sector possesses relatively
clear status groupings (at least at the high
end), many rankings systems, and a few
legitimating agencies (Corley & Gioia, 2000;
Durand & McGuire, 2005; Elsbach &
Kramer, 1996; Gioia & Thomas, 1996;
McKee, Mills, & Weatherbee, 2005; Wedlin,
2006). Looking at the California wine indus-
try, Benjamin and Podolny (1999) attempt to
differentiate the effect of product quality and
status affiliations on success. And looking at
architectural services, Jones and Manev
66 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
(2002) explore how legitimacy and status
affect reputation.
At a theoretical level, much work remains
to be done on how the processes of legitima-
tion, reputation-building, and status-seeking
intersect and overlap (Rao, 1994; Vidaver-
Cohen, 2006). Figure 1.2 suggests a few of
the most plausible interconnections: At their
cores, legitimacy, status, and reputation stem
from fundamentally different sources, with
legitimacy reflecting conformity to various
social guidelines, while status reflects ascrip-
tion and group mobility, and reputation
reflects achievement and self-presentation.
However, the three also influence one
another. Legitimacy affects status because a
commitment to avoid illegitimate activities
may be a criterion for status-group member-
ship; and status affects legitimacy because
membership in a high-status group may
create presumptions of proprietary that cush-
ion the impact of minor rule violations –
while at the same time increasing the penalty
for breaches that are so egregious as to
threaten the honor of the group as a whole.
Legitimacy affects reputation because
legitimate actors are often both more visible
and more credible in their self-presentations;
and reputation affects legitimacy because
Conformity to
social guidelines
Legitimacy
Presumption of
propriety
Criterion for Evaluation by
status-group legitimation
membership sources
Standing and
mobility
Status
Increased returns
Ascription and to performance
group mobility
Figure 1.2 The interrelation of legitimacy, reputation, and status
reputations are often taken into consideration
(at least formalistically) when legitimacy
sources make endorsement and affiliation
decisions. Finally, as mentioned previously,
status affects reputation by increasing the
returns to past achievements; and reputation
affects status both by determining an actor’s
standing within a particular status group and
by conditioning the likelihood of sponsored
mobility from one status group to another.
At the risk of oversimplification, much of
this discussion might be encapsulated in the
following equation:
Prestige = Legitimacy + Legitimacy *
(Status + Reputation + [Status * Reputation])
‘Prestige,’ here, denotes an organization’s
capacity to achieve objectives by virtue of
enjoying a favorable social evaluation.
Without legitimacy, prestige will be low,
regardless of the organization’s status or rep-
utation. However, legitimacy alone is rarely
enough to achieve much beyond the most
mundane tasks. Rather, legitimacy empowers
the organization to enunciate claims based on
both status and reputation – and status
and reputation further augment one another
through the visibility, credibility, and mobil-
ity effects described above.
Visibility and
credibility
Reputation
Achievement and
self-presentation
 LEGITIMACY IN ORGANIZATIONAL INSTITUTIONALISM
Before closing, we should perhaps note
that legitimacy, status and reputation are
hardly the only social evaluations to appear
in recent organizational literature. Others
include accreditation, certification, credibil-
ity, and accountability, as well as the related
concepts of the ‘exemplar’ and the
‘celebrity.’ To a large extent, these terms
simply re-district and re-label the terrain that
we have explored above. For instance, busi-
ness school accreditation associations have
been described as legitimating agencies
(Durand & McGuire, 2005), and accountabil-
ity and credibility are linked to trust, a central
component of both legitimacy and reputa-
tion. Certification, too, could be incorporated
into models of either legitimacy, status, or
reputation (cf., Schnatterly, Ward, & Lee,
2006). Some of the most well-known certifi-
cations are those of the International
Standards Organization (e.g., ISO 9000 and
ISO 14000), which – consistent with our
view of legitimacy – are open to any com-
pany that meets a set of predetermined crite-
ria (Beck & Walgenbach, 2005; Boiral, 2003;
cf., Guler, Guillen, & MacPherson, 2002;
ISO 9000 News, 1996).15 This type of
dichotomous, non-rival certification can be
distinguished from a ‘certification contest,’
defined as ‘a competition in which actors in
a given domain are ranked on the basis of
performance criteria that key stakeholders
accept as credible and legitimate’ (Rao,
1994; Wade, Porac, Pollock, & Graffin,
2006: 644). ‘Certification contests legitimate
organizations, generate status orderings, and
create favorable reputations’ (Rao, 1994: 29;
Wade et al., 2006); however, whether they
accomplish each of these tasks better or
worse than other evaluation mechanisms
largely remains to be determined.
Finally, exemplars and celebrities are
migrating into organizational studies. An
exemplar is a singular subject that sets the
standard for a certain social act, form,
or actor. For instance, Greenwood and
Empson (2003) proposed that profes-
sional partnerships may be an exemplary
governance mechanism; Rindova Petkova,
67
and Kotha (2007) demonstrated that
Amazon.com became the exemplar of e-
commerce in the 1990s; and Bowen (2004)
highlighted a US pharmaceutical firm as an
exemplar of ethical decision making.
Somewhat similarly, celebrities are entities
‘that attract a high level of public attention
and generate positive emotional responses
from stakeholder audiences’ (Rindova et al.,
2006: 51; Hayward, Rindova, & Pollock,
2004). Celebrities (and possibly exemplars)
benefit disproportionately from their posi-
tion, based on the economics of superstars
(Rosen, 1981). These benefits could be com-
pared to the privileges of high-status actors,
discussed above (Washington & Zajac,
2005).
INTEGRATIVE DISCUSSION
We conclude by presenting several integra-
tive recommendations. The first is to recog-
nize that legitimacy and its dimensions are
analytic concepts, not fully separable empir-
ical phenomena. The second is to further
investigate the workings of various sources
of legitimacy and the workings of legitimacy
at multiple levels of analysis. The third is to
embrace diverse perspectives, improving our
understanding of organizational legitimacy
by drawing on the work of other disciplines
such as law, mass communications, and
political science.
As a starting point, we urge legitimacy
researchers not to become fixated on defend-
ing the purity and independence of the differ-
ent dimensions of legitimacy. As suggested
above, the assertion that a legitimate organi-
zation must offer an ‘acceptable theory’ of
itself (Meyer & Scott, 1983: 202) is broad
enough to encompass a variety of such legiti-
mating accounts – from claims about cause
and effect (pragmatic legitimacy), to invoca-
tions of collectively valued ends (moral legit-
imacy), to constitutive suppositions about
definitions and meanings (cognitive legiti-
macy) (Greenwood et al., 2002; Meyer &
68 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Scott, 1983; Stryker, 1994; Suchman, 1995).
Early in the development of organizational
institutionalism, Meyer and Scott (1983:
214) observed that ‘the literature on legiti-
macy tends to distinguish sharply between its
cognitive and normative aspects. This may
overemphasize Western dualism.’ More
recently, Scott (1995: 143–4) has written that
‘distinctions … among [the three pillars of
institutions] are analytical in the sense that
concrete institutional arrangements will be
found to combine regulative, normative, and
cognitive processes together in varying
amounts.’As applied to legitimacy, any act of
legitimation may operate on a variety of
dimensions. For instance, regulatory
approval of a new pharmaceutical not only
confers regulatory legitimacy but also (a)
enhances the ‘cognitive’ comprehensibility
and taken-for-grantedness of the new com-
pound, (b) indicates that the entity is consis-
tent with the ‘moral’ value of good health,
and (c) confirms the entity’s demonstrable
‘pragmatic’ benefits. Similarly, Rao (1994)
reasoned that certification contests in the
early days of automaking provided both nor-
mative justification and cognitive validation
for the young industry – as well as pragmatic
promotion for those fortunate firms that
could demonstrate superior capabilities.
Instead of further reifying analytic distinc-
tions among the various dimensions of legit-
imacy, researchers might do well to attend
more closely to the workings of various
sources of legitimacy.16 The sources and sub-
jects of legitimacy are embedded in complex
networks of social influence and communi-
cation (Carter & Deephouse, 1999;
Granovetter, 1985; Rowley, 1997): Subjects
seek endorsement from various sources and
are pleased when they receive it, but certain
sources may have a larger impact than others.
For instance, regulatory approval of a new
pharmaceutical usually means more than
publication of a non-refereed research study
funded by the drug’s developer. Meanwhile,
subjects may not be the only entities seeking
to affect a given source’s deliberations:
Social movements often actively advocate
for the legitimation of certain subjects and
the de-legitimation of others (Elsbach &
Sutton, 1992; Rao, Morrill, & Zald, 2000;
Strang & Soule, 1998). These efforts and
counter-efforts are often adjudicated (albeit
not always fully resolved) by courts and
other public authorities as a corollary of the
state’s ostensible monopoly of legitimate
force (Edelman & Suchman, 1997; Suddaby
& Greenwood, 2005).
Overall, then, we see a growing role for
research on institutional politics, which
Stryker (2000: 190) defined as the ‘strategic
mobilization and counter-mobilization of
diverse institutional logics.’ Without
prejudging the findings of such research, the
literature to date suggests a central position
for rhetorical, discursive, and technical strug-
gles over what is legitimate and who is
authorized to theorize and certify (e.g.,
Hensmans, 2003; Lounsbury, 2007; Phillips
et al., 2004; Suddaby & Greenwood, 2005;
Vaara et al., 2006). Future research might
also consider the evolution and ecology
of entire populations of legitimacy sources.
Given that concepts from legitimacy research
have been used to study the births and
deaths of organizations, future research
could examine the births and deaths of legit-
imating agencies or rule systems (Jennings,
Schulz, Patient, Gravel, & Yuan, 2005).
Along these lines, Durand and McGuire
(2005), McKee, Mills, and Weatherbee
(2005), and Wedlin (2006) examined the cre-
ation and expansion of business school
accreditation agencies, and one could imag-
ine a similar approach to studying the prolif-
eration of business-school reputation
rankings. In this way, one might arrive at a
‘community ecology’ of legitimacy, in which
the legitimacy, competition, and population
density of subjects and sources – as well as
of advocates and activists – might interact
and coevolve.
We also believe that future research should
examine legitimation at multiple levels –
within organizations, among organizations,
and within organizational fields – and that these
investigations should include the interactions
 LEGITIMACY IN ORGANIZATIONAL INSTITUTIONALISM
among the levels.17 For example, Holm
(1995) presented a ‘nested systems’ view, to
examine how various sources contributed
to the legitimation and de-legitimation of
mandated sales organization in Norwegian
fisheries. More recently, Rubtsova and Dowd
(2004) examined cultural capital at the
macro-, meso-, and micro-levels, Sine, David,
and Mitsuhashi (2007) examined the effects
of firm and sector legitimacy on new
ventures, and Crumley, Lounsbury, and
Greenwood (2006) examined how social
actors attempted to legitimate and delegiti-
mate the role of acupuncture within the insti-
tutionalized western healthcare system. Such
cross-level studies are still in their infancy;
however, eventually research on how individ-
uals within groups within organizations grap-
ple with particular subjects of legitimation,
such as equal employment opportunity guide-
lines (Edelman, 1992), may yield useful
insights into the legitimation of authority
systems in general, a central topic in social
psychology (Berger, Cohen, & Zelditch,
1972; Johnson et al., 2006).
As researchers begin to explore the work-
ings of various sources of legitimacy, impor-
tant differences in kind are likely to emerge. To
facilitate productive dialog, we propose the
following tentative distinctions: Legitimacy
agents are those organizations, such as accred-
itors and regulators, specifically established to
confer legitimacy on a certain set of subjects
(Durand & McGuire, 2005). Legitimacy medi-
ators are other social actors, such as the media,
who make or convey implicit or explicit legiti-
macy assessments as a side-effect of their rou-
tine operations. And legitimacy guidelines are
abstract legitimacy-relevant constructs embed-
ded in society at large, such as language,
values, norms, social rules, etc. We use the
term ‘guidelines’ to highlight the fact that these
constructs may be in flux, may vary according
to local conditions, and may not be enforced as
strictly, as consistently, or as formally as might
be implied by the more commonly used phrase
‘social rules.’
In an early review, Galaskiewicz (1985:
298) stated ‘this literature [on legitimacy]
69
lacks an overarching theory of legitimation
to guide inquiry.’ Since that time, researchers
have made progress in developing not a
single overarching theory, but multiple theo-
ries matched to particular dimensions and
sources of legitimation. Increasingly these
theories have drawn on other disciplines, a
trend which we believe will and should
continue. For instance, Stryker (1994),
Suchman and Edelman (1996), Edelman and
Suchman (1997) and Edelman, Fuller, &
MaraDrita (2001) have extended arguments
from the ‘law and society’ tradition to
explore the impact of institutional ambiguity
and contestation. Analogously, Carter and
Deephouse (1999), Deephouse (1996),
Deephouse & Carter (2005), Kennedy
(2005), and others have adapted mass com-
munication theory to explore the role of the
media and public opinion. In the future, bor-
rowings from political science and public
administration may similarly enrich the
legitimacy literature’s depiction of regulators
and other public sector legitimation sources.
Equally important, though, will be exchanges
with other branches of organization theory
itself. After all, many sources of legitimation
are organizations in their own right (Hirsch,
1977; Scott, 1987), and their actions need to
be understood in organizational terms.
The development of an overarching theory
of legitimation remains unfinished business.
More than a decade after Suchman’s 1995
review, we still find that ‘most treatments
cover only a limited aspect’ (1995: 571) of
this complex but crucial subject. A more
adequate formulation would contain careful,
widely-accepted definitions, would examine
more aspects of the concept, and would incor-
porate both strategic and institutional views.
One practical challenge on the road to this
destination arises from the norms of the
business school world, in which many legiti-
macy researchers now work. Rewards there
increasingly favor journal publications
over longer works, arguably impeding the
construction of comprehensive explanations
for phenomena that are too complex to be
explicated in the space of 30–40 pages.
70 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Nonetheless, recent years have seen the
arrival of several exemplary books, such as
Scott et al.’s (2000) examination of healthcare
organizations and Wedlin’s (2006) examina-
tion of European business schools. And other
research programs have yielded impressively
cumulative sequences of journal articles, such
as the work on professional service firms con-
ducted by scholars at the University of
Alberta (e.g., Suddaby & Greenwood, 2005;
Greenwood et al., 2002; Hinings, Brown, &
Greenwood, 1991). These efforts represent
a solid start, but whether they will lead to a
more comprehensive and holistic understand-
ing remains to be seen. Hinings (2006) has
advocated the pursuit of ambitious, large-
scale research programs to reach new heights
in our understanding of complex organiza-
tional phenomena. Legitimacy is clearly one
of those complex phenomena, and we agree
that a large-scale research program may be in
order. We note, however, that this program
would require the efforts of many people over
many years. Can such concerted endeavors
become legitimate again?
NOTES
1 Given the large volume of relevant research, our
coverage here is necessarily only partial. Other
informative reviews of legitimacy scholarship include
recent essays by Stryker (1994, 2000), Suchman
(1995), Ruef and Scott (1998), and Johnson, Dowd,
and Ridgeway (2006).
2 Arguably, DiMaggio and Powell, themselves,
may have intended their arguments about profes-
sionals merely to illustrate one way in which any
norms, whether general or specific, might generate
isomorphism in an organizational field. Be this as it
may, the linkage between normative isomorphism
and professionalization has now become so firmly
rooted in the organizational literature as to be virtu-
ally a matter of definition.
3 DiMaggio (1995) has expressed caution about
the facile assumption that cognitive legitimacy and
mimetic isomorphism necessarily go hand in hand.
However, few others in this tradition have taken his
concerns to heart.
4 One might argue that prevailing definitions of
efficiency are, themselves, institutional myths. Most
institutionalist scholarship, however, treats technical
efficiency and institutional conformity as two largely
distinct attributes.
5 Here, we focus on organizational status. Thus,
the ‘ranked social actors’ in question are organiza-
tions, and the ‘groups’ are, for example, the upper,
middle and lower tiers of an industry or the federal,
state, and local levels of a government.
6 This definition is consistent with reputation’s
etymological roots in Latin as re-putare, ‘to think
back upon.’ In managerial and economic usages,
however, this ‘thinking backward’ is often associated
with ‘acting forward.’ For instance, if a company has
a reputation for product quality, then customers are
more likely to pay extra for its products; if a company
has a reputation for being a bad place to work, then
recruits will avoid it and employees will seek new jobs
elsewhere (Fombrun, 1996; Weigelt & Camerer,
1988).
7 For obvious reasons, questions like this link all
three literature to a fourth literature (not reviewed
here) on organization impression management (e.g.
Elsbach, 1994; Elsbach & Sutton, 1992).
8 Readers who quail at constraining their
favorite term should take comfort from our focus on
connotations rather than denotations. We see no
need to narrow the permissible usages of any partic-
ular term at this time; however, much can be learned
from exploring how legitimacy, status, and reputation
may carry differing overtones even when applied to
similar phenomena.
9 This is self-fulfilling to some extent: Entities
that manage to achieve legitimacy on their own
often become the templates for legitimate forms. As
the original instance is imitated, its initially idiosyn-
cratic claim to legitimacy becomes reinstitutionalized
at the level of the form as a whole.
10 In this sense, organizational reputation is quite
close to organizational identity – with the caveat that
reputation emphasizes identity as assessed by trans-
action partners, rather than identity as internalized
by representatives of the organization itself.
11 Reputation can also apply to groups of firms
(Ferguson, Deephouse, & Ferguson, 2000; Wry,
Deephouse, & McNamara, 2006). But the strategic
groups that sometimes appear in reputation research
are not necessarily equivalent to status groups, since
the former are united by shared performance
profiles, while the latter are united by collective
honor claims.
12 Here, we confine ourselves to addressing over-
laps between legitimacy and status and between
legitimacy and reputation. Overlaps between status
and reputation, although equally common, are left
for another day.
13 The label refers to a verse from the biblical
Book of Matthew: ‘For unto every one that hath shall
be given, and he shall have abundance: but from him
that hath not shall be taken away even that which he
hath’ (Matthew XXV: 29, King James Version).
 LEGITIMACY IN ORGANIZATIONAL INSTITUTIONALISM
14 Here, the size of the boxes is arbitrary; how-
ever, future research might empirically assess the rel-
ative magnitudes of various sub-groups.
15 Over 127,000 firms worldwide had met ISO
9000 targets by 1996.
16 These two endeavors are not mutually exclu-
sive, of course. We mean merely to indicate which of
the two we would give priority.
17 Stryker (2000: 187, 191) and Scott (1995)
have both noted that despite the potential for both
top-down and bottom-up approaches to institutions,
most cross-level work to date has taken a top-down
approach.
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Isomorphism, Diffusion
and Decoupling
Eva Boxenbaum and Stefan Jonsson
INTRODUCTION
A longstanding question in organization
research is what makes organizations more
or less similar to each other. Early organiza-
tion theorists pointed out that organizations
that share the same environment tend to
take on similar forms as efficiency-seeking
organizations seek the optimal ‘fit’ with
their environment. Institutional theories of
organization have added two related claims.
First, organizations adapt not only to techni-
cal pressures but also to what they believe
society expects of them, which leads to
institutional isomorphism. Organizations
need a societal mandate, or legitimacy,
to operate and this is gained by conforming
to societal expectations. Second, when
adaptations to institutional pressures contra-
dict internal efficiency needs, organizations
sometimes claim to adapt when they in
reality do not; they decouple action from
structure in order to preserve organizational
efficiency. A large number of empirical
studies have subsequently refined the related
propositions of institutional isomorphism
and decoupling, and also introduced new
2
questions and dimensions to the original
propositions. Our aim in this chapter is to
bring clarity to this body of literature by first
establishing the state of the art and then
identifying important areas in need of further
research.
A central idea of institutional isomor-
phism is that organizations conform to
‘rationalized myths’ in society about what
constitutes a proper organization. These
myths emerge as solutions to widely
perceived problems of organizing and
become rationalized when they are popularly
believed to constitute the proper solutions
to these problems. As more organizations
conform to these myths they become more
deeply institutionalized, which subsequently
leads to institutional isomorphism (Meyer
and Rowan 1977). Institutional isomorphism
is facilitated by processes that further the
diffusion of ideas, practices and prescribed
organizational structure among organizations
(DiMaggio and Powell 1983). While
diffusion was introduced as a mechanism
that led to isomorphsim, many empirical
researchers have implicitly reversed this
causal link. The result is that there has been
little empirical work with isomorphism as the
 ISOMORPHISM, DIFFUSION AND DECOUPLING
outcome of diffusion, while there is a wealth
of empirical studies that invoke institutional
isomorphism as the cause of diffusion.
Furthermore, we notice a recent shift in insti-
tutional literature toward the acknowledge-
ment of heterogeneity in the institutional
environment (cf. Dacin, Goodstein and Scott
2002). An emphasis on isomorphism as a
driver of diffusion rather than an outcome
coupled with a growing sensitivity to hetero-
geneity of institutional environments is prob-
ably why we find surprisingly little empirical
evidence of institutional isomorphism; extant
evidence is simply not conclusive.
The second claim about organizational
similarity is that organizations decouple their
formal structure from their production
activities when institutional and task environ-
ments are in conflict, or when there are con-
flicting institutional pressures. Decoupling
enables organizations to seek the legitimacy
that adaptation to rationalized myths
provides while they engage in technical
‘business as usual’. While decoupling is a
core idea in institutional theory, it has
received relatively little scholarly attention
(see e.g. Scott 1995), although this trend
seems to be reversing. We review the empiri-
cal research that has refined the notion of
decoupling and the factors that have been
found to predict or mediate this response to
institutional pressure for conformity.
Despite the centrality of isomorphism
and decoupling within institutional theory
and their close theoretical ancestry, little
attention has been devoted to examine
how they relate to each other. We recognize
that this absence provides for several
interesting future research avenues; for
instance whether or not the ease of decou-
pling within an organizational field influ-
ences the likelihood and speed of
institutional isomorphism, or whether
decoupling is more likely in a heterogeneous
or mature institutionalized environment. A
fruitful empirical and theoretical research
agenda is to clarify the relationship between
isomorphism and decoupling under different
field conditions.
79
We begin the chapter with an outline of
the early theoretical formulations, where we
explicate the initial core theoretical
statements of isomorphism and decoupling
and proceed to trace how decades of empiri-
cal research have contributed to the refine-
ment of these statements. This refinement
has taken place against the backdrop of a
wider shift within institutional theory
towards a greater recognition of heterogene-
ity in the institutional environment and in
organizational response to institutional pres-
sures. We discuss how this shift has impacted
on our understanding of isomorphism and
decoupling and end the chapter with a
discussion of what we identify as neglected
areas of research, as well as the relationship
between institutional isomorphism and
decoupling. It is our hope that this juxtaposi-
tion of empirical findings with our reflection
on the interaction among isomorphism,
diffusion and decoupling catalyzes new and
exciting research questions that can propel
institutional theory forward.
EARLY THEORETICAL STATEMENTS
Isomorphism
Why are organizations so strikingly similar?
DiMaggio and Powell (1983) proposed that
institutionalized ideas pressure organizations
to adopt similar structures and forms, and as
a result they become increasingly similar. It
was not a new idea in organization theory that
organizations in the same environment over
time also come to share their appearance.
Already Weber argued that the ‘iron cage of
rationality’ and that competitive forces in
society would pressure organizations to
similarity in structure and action. Rational
adaptation theorists then claimed that organi-
zational similarity results from efficiency-
seeking organizational adaptation to a similar
task environment (Scott 1995). Playing down
the aggregate effects of organization-level
adaptation, population ecology theorists have
80 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
subsequently argued that environmental com-
petitive selection forces leave the surviving
organizational population structurally similar.
Institutional isomorphism was distinct from
these perspectives in its assertion that organi-
zations became similar not through adaptation
to an external or technically demanding
environment or through the ‘weeding out’ of
technical and social misfits, but through adap-
tation to a socially constructed environment.
The timing of the statement about institutional
isomorphism should be understood against the
backdrop of a longstanding interest within
organizational sociology in the structure of
organizations, a heritage from open-systems
theories of the 1960s, and the development of
the population ecology school from 1977 and
onwards (Scott 2004).
DiMaggio and Powell outlined three pres-
sures that lead organizations to become
increasingly similar: coercive, mimetic and
normative pressures. Coercive pressures result
from power relationships and politics; proto-
typically these are demands of the state or
other large actors to adopt specific structures or
practices, or else face sanctions. Coercive pres-
sures are not only by fiat but can also result
from resource dependence, such as demands to
adopt specific accounting practices to be eligi-
ble for state grants or requirements of ISO cer-
tification to become a supplier (see for instance
work by Edelman 1992; Guillen 2001; Sutton
et al. 1994). Mimetic pressures arise primarily
from uncertainty. Under conditions of uncer-
tainty organizations often imitate peers that are
perceived to be successful or influential
(Haveman 1993; Palmer, Jennings and Zhou
1993). Normative pressures pertain to what is
widely considered a proper course of action, or
even a moral duty (Suchman 1995), such
as when there are signals from the organiza-
tional environment that the adoption of a
particular practice or structure is a correct
moral choice. Normative pressures are often
associated with professions because the
similar education and training instil similar
professional values of what is ‘proper’, which
is then carried into organizations with profes-
sionals who then tend to favour the adoption of
similar practices and structures (for instance
Galaskiewicz and Burt 1991; Mezias 1990).
These three pressures can also be thought
of in terms of topographical directions from
where isomorphic pressures emanate in an
organizational field: regulative pressures
normally come from above (the state)
whereas mimetic and normative pressures
often stem from horizontally positioned peer
organizations or groupings. Strang and Soule
(1998) also liken the three pressures to a
mapping of diffusion channels in terms of
external diffusion pressure on the organiza-
tion, such as the state, peer pressure across
firms, or internal diffusion pressure from
professional information networks.
DiMaggio and Powell then propose a
dozen hypotheses relating to how organiza-
tions subject to isomorphic pressures respond
to an increasingly institutionalized environ-
ment. These hypotheses, which set the arena
for much of the subsequent empirical work on
isomorphism, range from predictions about
the degree of isomorphism at the level of an
organizational field to the rate by which
different kinds of organizations are expected
to morph to similarity within the field. The
hypotheses relate to questions that were, at
the time, topical in organization theory, most
notably questions about organizational
structure, implications of resource depend-
ence across organizations, the effects of orga-
nizational and field goal ambiguity, and the
level of professionalization of the workforce.
While these theoretical statements and
propositions were meant to further our
understanding of how organizations became
increasingly similar over time, empirical
research fairly soon re-directed their use to
further our understanding of the diffusion of
practices and ideas, which means that some
of the fundamental ideas of institutional
isomorphism still await confirmation.
Decoupling
When organizations are pressured to adapt to
societal rationalized myths about what
 ISOMORPHISM, DIFFUSION AND DECOUPLING
organizations should look like and do, they
face two problems: First, the rationalized
myths may not comprise an efficient solution
for the organization, and second, competing
and internally inconsistent rational myths
can exist simultaneously. Meyer and Rowan
(1977) proposed that organizations decouple
their practices from their formal or espoused
structure to solve these two problems of
institutional pressures. In effect, decoupling
means that organizations abide only superfi-
cially by institutional pressure and adopt new
structures without necessarily implementing
the related practices.
The idea of organizations decoupling
structure and action reflected the perspective
of organizations as loosely coupled systems
that became popular in the mid-1970s.
A group of organizational sociologists and
social psychologists proposed loose coupling
as a solution to problems of change and
reform in US public schools (Hallet and
Ventresca 2006). In a challenge to the
dominant system theory where organizations
were seen as coherent units composed of
densely linked and interdependent elements,
they proposed instead that organizational
elements are loosely coupled to one another.
Drawing on this insight they investigated
different kinds of couplings and how these
are created (e.g. Weick 1979) also in relation
to decision-making processes (March and
Olsen 1976). In contrast to the more general
idea of organizations as loosely coupled
systems, Meyer and Rowan refer specifically
to a form of loose coupling that is a discon-
nect between organizational practice and
organizational structure, where the former is
determined by perceived efficiency concerns
and the latter results from institutional
pressure for conformity.
In its original statement, decoupling can
be a rational response to demands for organi-
zational adaptation that are inconsistent or
harmful to the organization; by decoupling,
organizations achieve legitimacy through
espoused action but remain efficient or con-
sistent through actual action, which enhances
their survival prospects. Gaining legitimacy
81
without actually adapting relies critically on
the ‘logic of confidence and good faith’, i.e.
that people trust that the organization does
what it says it will (Meyer and Rowan 1977:
357), which means that organizations that
decouple must avoid close inspection or else
they are exposed as frauds. A corollary to the
decoupling proposition is that when institu-
tional pressures lead to decoupling, organiza-
tions will do their best to avoid scrutiny or at
least to control the process of scrutiny.
EMPIRICAL EXAMINATION
Given the voluminous research on institu-
tional isomorphism and decoupling, it was
necessary to structure the review of empirical
work according to themes that emerged as
salient after a first reading of the literature.
These themes are partially chronological. In
the discussion section, we touch on the
development of these themes in relation to
the wider theoretical developments within
institutional theory.
Isomorphism
Similar to what?
A central question with respect to isomor-
phism is what the relevant environment is to
which organizations are thought to become
(or not become) isomorphic? While this is a
question that is not often discussed, a broad
dividing line can be drawn between empirical
studies that conceptualize the institutional
environment in terms of technical and goal-
setting features, i.e. societal sectors (Scott and
Meyer 1983), and studies that consider the
environment to be a socially constructed
‘field’ (DiMaggio and Powell 1983). The
social sector approach differs from an organi-
zational field perspective in the conceptual-
ization of the institutional environment as
external and exogenous to organizations; it is
the technical nature of the production task
that determines the nature of the institutional
82 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
environment, a factor that changes through
technical development rather than organiza-
tional action. Seeing the institutional environ-
ment as a field, in contrast, positions the
institutional environment as a result of a
structuration process that involves all field
actors (Powell and DiMaggio 1991; Zucker
1987). A further difference is that the concept
of institutional sectors is hierarchical in
nature, with clear distinctions between hori-
zontal and vertical ties (Scott and Meyer
1983), whereas the field essentially represents
a relational non-topographical space that
stems from its ideational roots within network
theory (Mohr 2005).
The perspective on the environment is
important to our understanding of how iso-
morphic pressures can be thought to operate
on organizations. An organizational sector
approach, which broadly defines the relevant
environment as input–output relations,
makes technological shifts important drivers
of changes in isomorphic pressures. If, in
contrast, the arena for isomorphic pressures
is thought of as socially constructed by
organizations, then the source of isomorphic
pressures is instead partly endogenous to
the organizations. An important point is that
this theoretical dividing line between two
perspectives on the nature of the institutional
environment is seldom reflected in empirical
studies (see, however, Scott 1987; Zucker
1987). What we see instead are empirical
definitions of ‘organizational fields’ that are
largely coterminous with the theoretical con-
cept of societal sectors (for instance the typi-
cal ‘industry’ definition of a field), which are
then matched with DiMaggio and Powell’s
theoretical apparatus of isomorphism in a
socially constructed field. Very few, if any,
studies of institutional isomorphism match
DiMaggio and Powell’s idea of isomorphic
forces with a constructionist definition of the
organizational field. This may be unproblem-
atic, we do not know, but it needs further the-
oretical and empirical work. As it is beyond
the scope of this chapter to focus on the
thorny issue of the relevant definition of what
organizations are supposed to morph with,
we direct the interested reader to the work by
John Mohr (2005).
Similar in what?
Another important question about isomor-
phism is in what respect organizations are
supposed to become similar. The early theo-
retical statement by DiMaggio and Powell is
ambiguous on this topic, suggesting that iso-
morphism can be detected by ‘the lessening
in variance around some central dimension’.
This ambiguity essentially left subsequent
empirical researchers to their own devices
(Oliver 1988; Scott and Meyer 1994). The
few studies that have investigated isomor-
phism as an outcome emphasize different
dimensions and levels in their measurements
of similarity. Meyer, Scott and Strang (1987)
investigated isomorphism in the structure of
U.S. schools and found more evidence of iso-
morphism at higher levels of the administra-
tive system, levels that were further removed
from the local task environment of education.
Meyer and colleagues (1997) also investi-
gated the structure of national educational
systems in a large-scale empirical study of
world systems, and they show that educa-
tional systems are becoming increasingly
similar across the globe, especially so in
countries that are more tightly integrated into
the ‘western cultural account’.
Other studies have focused more closely
on isomorphism in what organizations do.
Levitt and Nass (1989) investigated isomor-
phism in the output of college text book pub-
lishing, where they found isomorphism to be
more prevalent in the mature academic field
of physics than in sociology. Kraatz and
Zajac (1996) showed that in a maturing field
of U.S. higher education, the scope of college
programs decreased in homogeneity, instead
of increased, suggesting that isomorphism
did not occur, at least not in the programs
that colleges offered. Lifting the level of
analysis to that of national economic sys-
tems, Orru, Biggart and Hamilton (1991)
showed that corporate governance structures
are more similar within, than across, national
economies in the Far East.
 ISOMORPHISM, DIFFUSION AND DECOUPLING
The common feature of these empirical
studies is the ambiguity of the relevant
dimension and level of analysis where simi-
larity should or should not occur in order to
confirm the presence of institutional isomor-
phism. This ambiguity makes it difficult,
even after three decades of research, to deter-
mine the degree of empirical support for the
proposition of institutional isomorphism,
including its limitations. More theoretical
work clearly needs to be done in this area to
render institutional isomorphism an empiri-
cally falsifiable theoretical proposition.
Similarity as diffusion?
Even if the above studies on isomorphism are
not always directly comparable, at least they
try to measure isomorphism as an outcome
variable, which is not the case with the
majority of studies that invoke institutional
isomorphism. Rather than test isomorphism
as an empirical outcome, these studies have
typically turned to the mechanisms through
which isomorphism supposedly happens,
i.e. the three isomorphic pressures outlined
by DiMaggio and Powell. In studying these
mechanisms without also investigating
the resulting isomorphism, institutionalists
have often drifted very close to the prolific
field of diffusion studies. An example of the
confluence of institutional and diffusion
studies is the investigation of the spread of
administrative reforms by Tolbert and Zucker
(1983). They tested coercive pressures
against mimetic pressures and found that
coercive pressures were more effective than
mimetic pressures in spreading a new
practice. It is a typical research strategy
within diffusion studies that invokes
institutional theory and test one (or more) of
the isomorphic pressures against an effi-
ciency or resource dependence perspective,
in order to explain the diffusion of certain
practices and structures (for instance Kraatz
and Zajac 1996; Palmer, Jennings and Zhou
1993).
The various diffusion studies that invoke
theories of isomorphic pressures can be
organized according to the focal type of the
83
isomorphic pressures. Early studies found
that mimetic pressures emanated most
strongly from actors that are considered sim-
ilar (Greve 1998), successful and prestigious
(Haveman 1993). In addition, Haunschild
(1993) found mimetic pressures to operate
through networks of board members. Other
studies found normative pressures to
influence the manner in which large U.S.
firms adopted new accounting standards
(Mezias 1990) and the multidivisional
form (Palmer, Jennings and Zhou 1993).
Empirical support was also found
for the claim that legal measures lead to
coercive diffusion pressure. Edelman
(1992) showed that coercive employment
equity laws made organizations change
their structure and subsequently their
practice even if organizations were quite
influential in interpreting what it meant to
comply.
Among the three isomorphic pressures,
mimesis has received the most attention
(Mizruchi and Fein 1999). One reason for
this focus on mimetic pressures, as Mizruchi
and Fein argue, is that power perspectives are
out of vogue among North American social
scientists, which is why coercive and norma-
tive isomorphic pressures have received less
attention. Another plausible explanation is
that mimesis is easier to study with
quantitative methods while it is more
difficult to collect data on normative
pressures or to illuminate the exercise of
coercion in large quantitative studies. A third
possible explanation is that normative and
coercive processes receive attention in other
theoretical traditions or in specific
institutional literatures, such as European
institutional schools (cf. Mizruchi and Fein
1999).
These empirical studies that invoke institu-
tional isomorphism do not investigate the
resulting level of isomorphism in the
field, but instead elaborate on the mechanism
by which practices spread. They do so under
the implicit assumption that diffusion
equals isomorphism, an assumption that
certainly needs verification.
84 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Similarity in a heterogeneous environment
The very idea of institutional isomorphism
presupposes an institutional environment
with which the organization can morph.
A crucial question is how institutional
isomorphism can occur where the institu-
tional environment is not homogenous.
Part of the answer may be ambiguities in
the original theoretical formulation of insti-
tutional isomorphism, in particular with
respect to how the institutional environment
(i.e. the organizational field or social sector)
and its effects can be identified and delimited
(cf. Mohr 2005).
Early studies of isomorphism in organiza-
tional fields conceptualized the organiza-
tional field as unitary and examined how
institutional pressures affected organizations,
presumably in an equal manner (Scott 2001).
In more recent studies the field has increas-
ingly become conceptualized as ambiguous
and heterogeneous with multiple institutional
pressures that often result in conflicting pres-
sures for conformity. Isomorphic pressures
have been found to interact with competitive
pressures and space (D’Aunno, Succi and
Alexander 2000; Dacin 1997) and vary over
time (Dacin 1997; Ruef and Scott 1998). An
example of the effects of variation in the
local competitive context is provided in a
study of isomorphism in U.S. higher educa-
tion, where Kraatz and Zajac (1996) show
that the increasing maturity of the field does
not lead to homogeneity (isomorphism) in
educational programmes because of a simul-
taneous increase in competitive pressure to
differentiate student programmes. The struc-
ture of networks through which the ‘markers
of similarity’ travel, i.e. how entities diffuse,
can also limit the resulting isomorphism
within an organizational field. Greve (1996)
studied the spread of new competitive strate-
gies among radio stations and found that
mimetic pressure led to practice polymor-
phism (islands of homogeneity) because
imitation networks were geographically
bounded in markets. Similar findings are also
reported in a number of qualitative studies of
the spread of practices and the resulting
isomorphism (Boxenbaum and Battilana
2005; Schneiberg 2002; Townley 2002;
Zilber 2002).
Similarity and heterogeneous
organizational response
Apart from an increasing attention to hetero-
geneous institutional pressures, serious orga-
nizational thinkers have also challenged the
assumption that, once subjected to institu-
tional pressures, organizations either con-
form or die (cf. DiMaggio 1988; Perrow
1986; Scott 1991). This topic evokes the
larger question within institutional theory of
whether or not institutions are fully internal-
ized in actors (i.e. ‘social facts’) or if actors
can comprehend and thereby ‘game’ them
(Zucker 1987). The division between institu-
tions as social fact and institutions as visible
limitations on action splits empirical work on
the effect of isomorphic pressures. One line
of research adopts the more agentic approach
where actors can strategize and manipulate
institutional pressures; in this research it is
organizational similarity and not difference
that needs to be explained, organizations
have choice. This form of institutionalism
received a boost after Powell and DiMaggio
(1991) argued that institutional analysis
needs to do away with the organization as an
‘institutional dope’. A key issue within this
literature is whether isomorphism is attrac-
tive when all organizations occupy the same
strategic and resource space (Deephouse
1999; Greenwood and Hinings 1996). The
other line of research is a less agentic
approach where organizations internalize
institutional pressures to a greater extent. As
institutions constitute actors and actions,
there is no consciousness involved in follow-
ing norms; conformity comes naturally and
deviance is almost unthinkable. Here it is not
similarity, but difference, that needs to be
explained. Isomorphism is not guaranteed,
and will, for instance, not happen when there
are cognitive or capability limitations on
becoming isomorphic (Goodrick and
Salancik 1996). This latter direction is most
clearly articulated in European books on
 ISOMORPHISM, DIFFUSION AND DECOUPLING
translation, editing and globalization (for
instance Djelic and Quack 2003; Sahlin and
Engwall 2003).
Within an agentic perspective, organiza-
tions are seen as active agents that can
respond differently, within certain bound-
aries, to institutional pressure (Ingram and
Clay 2000). Oliver (1991) argued that
organizations under certain circumstances
have leeway to act strategically in the face of
isomorphic pressures. She proposed five
strategic responses that are available to
organizations that face institutional pressure
to conform. The first one, acquiescence
(conformity), is essentially the response that
leads to isomorphism while the second one,
compromise, can manifest as decoupling
(Scott 2001). The third and fourth, avoidance
and defiance, are two forms of resistance that
organizations display when they disagree
with the objectives of the constituents who
put pressure on them to adopt a new organi-
zational element. Manipulation, the fifth
response, is akin to institutional entrepre-
neurship in the sense that it implies a deliber-
ate attempt to change institutions in a certain
direction. Oliver’s theoretical argumentation
has triggered a number of empirical studies
(see for instance Goodrick and Salancik
1996; Ingram and Simons 1995) that relate
strategic considerations to isomorphism.
In the non-agentic tradition, where
institutions are ‘social facts’, organizations
may also respond heterogeneously, but for a
different reason. Several studies link organi-
zational responses to environmental
contingencies, demonstrating how time,
space and local competition introduce varia-
tion in organizational response to isomorphic
pressures, even where the institutional pres-
sures are fully internalized (Beck and
Walgenbach 2005; D’Aunno, Succi and
Alexander 2000; Dacin 1997; Jonsson 2003).
At other times organizations are simply not
able to perfectly replicate an institutionally
sanctioned structure or practice. That is the
case even if institutional pressures have
been internalized to such an extent that adop-
tion of a structure or practice is perceived as
85
self-evident and desirable. When a practice or
structure is implicitly adapted to local institu-
tions, it is broadly referred to as translation or
editing (see the chapter on translation). We
thus see the larger division between institu-
tion and actorhood reflected in studies on
institutional isomorphism; after 1991 there
are relatively fewer studies of isomorphism as
an outcome presumably because of a greater
emphasis on actorhood in institutional theory
in general. It would be interesting to follow
up on this preliminary observation with a
meta-study that relates the larger shifts in
institutional theory to how institutional
isomorphism is studied empirically.
Decoupling
Does decoupling occur?
Several empirical studies have sought to con-
firm the existence of decoupling. For
instance, in a study of affirmative action
policies in a small liberal arts college in the
United States, Edelman et al. (1992) found
that the affirmative action officer exercised
significant flexibility in the hiring process
although he had issued policies that reflected
affirmative action legislation. By means of
decoupling, he conferred legitimacy upon the
college while simultaneously attending to
divergent concerns related to its teaching
staff. Similarly, Brunsson and Olsen (1993)
found that a radical reform at Swedish Rail
was formally implemented without
significant impact on daily operations. While
management thought that the reform would
result in near chaos, they discovered to their
surprise that rail traffic and operational
supervisors were virtually undisrupted
by the reform. Decoupling made it easier for
management to make decisions on reform
since operational departments were collabo-
rative as long as the reform did not affect
their work in any significant way.
Collectively, these studies provided some
empirical support for Meyer and Rowan’s
proposition that formal structure can be,
and often is, decoupled from production
activities.
86 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Why do organizations decouple?
Institutional decoupling carries with it a risk
of detection where it would no longer confer
legitimacy, but probably shame, on the
organization. So why do organizations
decouple? One suggestion is that organiza-
tions decouple if they experience strong
coercive pressure to implement a new prac-
tice (Seidman 1983), and all the more so if
they distrust the actor that asserts pressure on
them (Kostova and Roth 2002). Another pos-
sibility is that decoupling increases as an
organizational field becomes more homoge-
neous. Investigating the introduction of long-
term CEO compensation plans, Westphal and
Zajac (1997) showed that early adopters
were more likely than late adopters to imple-
ment adopted incentive plans. Their research
(Westphal and Zajac 1994, 1997) indicates
that decoupling is most likely among reluc-
tant (later) adopters that respond to norma-
tive pressure, a finding that is corraborated
by a study of financial analysts who initiated
coverage of firms. Analysts who initated cov-
erage late were also more likely to abandon
their actions earlier (Rao, Greve and Davis
2001). First movers and adopters are eager to
implement while late movers more readily
decouple, a response that they hide behind
seeming enthusiasm. A study by Fiss and
Zajac (2006) concluded, for instance, that
organizations that fervently proclaim their
conformity to demands for strategic change
are less likely to be the ones that actually
implement structural changes. This intrigu-
ing question of how isomorphism relates to
decoupling is one that deserves careful atten-
tion in future research.
Decoupling as a response to field
heterogeneity
In their initial formulations, Meyer and
Rowan suggested that decoupling was a
response to two organization-level problems:
contradictions with internal organizational
efficiency and contradictions among multiple
institutionalized pressures. Early studies
focused primarily on decoupling as a
response to save internal organizational
efficiency, whereas recent studies suggest
that decoupling is a result of heterogeneous
organizational fields with multiple and often
contradictory pressures on the organization
(cf. Heimer 1999; Ruef and Scott 1998).
Faced with simultaneous contradictory pres-
sures, organizations survive by engaging in
decoupling. For instance, George et al.
(2006) proposed that decision makers resort
to decoupling when they face ambiguity in
their reading of the environment. They may
respond to heterogeneous pressure for
conformity by conforming to select institu-
tional pressures and ignoring others. Aurini
(2006) found, for instance, that educational
institutions routinely shed some of the most
sacred schooling scripts, but flourished
anyway because they responded to new
pressures, such as consumer demands for
individualized education programmes. They
decoupled some institutions to be able to
implement others, recognizing that there
were several ways to obtain legitimacy in this
heterogenous field.
Decoupling structure from practice can
take multiple forms simultaneously. Nils
Brunsson (2002) suggests that organizations
solve the dilemma of contradictory demands
by meeting some demands by talk, others by
decisions, and yet others by action. They are
required to do so, he argues, because if they
act consistently with what is said and what is
decided in a situation of conflicting
demands, then they will satisfy only one
interest at the expense of the others. In resort-
ing to decoupling, organizations increase
their chance of survival as they prevent
conflicts from escalating. A study of the
Danish Red Cross came to a similar conclu-
sion, showing that the organization became
more robust when it decoupled ideology and
structure from concrete programmes and
activities (Christensen and Molin 1995).
Decoupling thus turned out to be a safe-
guarding mechanism in a heterogenous field,
an attempt to compose with conflicting
demands in a way that minimizes risk.
The move to embrace heterogeneity in
empirical studies has not been accompanied
 ISOMORPHISM, DIFFUSION AND DECOUPLING
by a commensurate theoretical elaboration.
Researchers have noted, however, that organ-
izations in the same organizational field do
not respond similarly to the same pressures,
an observation that indicates that decoupling
may be related to factors in the individual
organization.
Decoupling as a strategic response?
In their initial formulation, Meyer and
Rowan proposed that decoupling consists in
adopting a structure for legitimacy purposes,
but not implementing it in practice because
of a (perceived) conflict with technical
efficiency concerns. Oliver (1997) found
empirical evidence for the proposition that
decoupling is critical to an organization’s
success. This relationship was particularly
strong when resource stringency was high
and organizations depended on constituents
in the task environment who held control
over land, labour, capital and suppliers.
Stringent regulation made organizations
engage in less decoupling.
Recent developments in the decoupling
literature has broadened the scope of decou-
pling from a defensive action, which Meyer
and Rowan wrote about, to something akin to
impression management. For instance, brand
managers of up-market wineries deliberately
decoupled projected images from internal
practices to create powerful brand images,
which apparently increased their profits
(Beverland and Luxton 2005). In another
example of the proximity to impression man-
agement, Elsbach and Sutton (1992) investi-
gated how radical social movement
organizations acquired legitimacy and mobi-
lized constituent support. They found that
spokespersons shifted attention away from
controversial actions toward socially desir-
able goals that were endorsed by broader
constituents. They simultaneously decoupled
their illegitimate activities from their legiti-
mate organizational structures. There is
much room to investigate the strategic
aspects of decoupling in future research.
It may be fruitful, for instance, to map
the motivations and conditions that lead
87
organizations to decouple for proactive
reasons rather than for defensive reasons.
What predicts decoupling?
Even when subjected to similar institutional
pressures, some organizations decouple
while others do not. The interesting question
in this regard is which organizational vari-
ables affect whether an organization engages
in decoupling. One suggestion is that decou-
pling follows naturally from a realization that
the organization may derive financial bene-
fits from it. In one of the first quantitative
studies of decoupling, Westphal and Zajac
(1998) found that the market price of
corporations increased when they adopted a
legitimate practice, regardless of whether
they implemented it or not. This finding
validates Meyer and Rowan’s proposition
that decoupling is a pragmatic response to
conflicting pressures to ensure both legiti-
macy and technical efficiency. Others have
refined their theoretical proposition by inves-
tigating which variables mediate the act of
decoupling. Naturally, the prerequisite is
here that organizations are aware of the pos-
sibility of decoupling and consider it to have
a strategic advantage.
Power dynamics has been identified as an
important variable that mediates the desire to
decouple and the action of decoupling. In a
longitudinal study of the response of large
U.S. corporations to pressure from external
sources to adopt stock repurchase pro-
grammes, Westphal and Zajac (2001) found
that organizational power dynamics medi-
ated the ability of organizations to decouple.
While organizations derived legitimacy from
adopting the stock repurchase programme,
top executives had a personal interest in not
implementing these programmes in practice.
Decoupling occurred more frequently when
top executives had power over boards to
resist external pressure for change. There is
further evidence for external pressure as a
mediating variable between the desire to
decouple and the act of doing it. A survey of
302 senior financial executives showed that
executives were less likely to decouple the
88 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
company’s ethics code from strategic deci-
sions when they experienced strong pressure
from market stakeholders like suppliers, cus-
tomers or shareholders (Stevens et al. 2005).
Decoupling also became infrequent when
the ethics code was already integrated into
daily activities through ethics code training
programmes.
Finally, empirical research suggests that
networks and coalitions also mediate the
decoupling response. Westphal and Zajac
(2001) found that top executives who had
prior experience with decoupling or who had
social ties to organizations that did, were
more likely to engage in decoupling them-
selves. A consensus on decoupling formed
among top executives who had no personal
interest in implementing a new practice,
which facilitated the decision to decouple.
On the other side of the equation, Fiss and
Zajac (2004) found that decoupling was least
likely in companies where powerful and
committed actors cared strongly about
implementation and could influence the
organizational response. This finding came
from a study of over 100 of the largest
publicly traded German companies in the
period 1990–2000. Social networks also
prevented decoupling in a study of recycling
(Lounsbury 2001) and made organizations in
another study imitate each others’ corporate
acquisition activities independently of institu-
tional pressure from the field (Haunschild
1993). These findings are intriguing. They not
only confirm that strategic alliances have a
legitimating effect (Dacin, Oliver and Roy
2007), but they also point to new areas of
investigation in the interface between institu-
tional theory and social network studies. One
topic that could be interesting is the effect that
coalitions, networks and strategic alliances
have on the desire and ability of organizations
to engage in decoupling.
Sustainable over time?
While the idea that actors sometimes only
pretend to do something that is socially
desirable is theoretically powerful, it is also
limited because it overlooks the dynamic
effects of such pretence. It is not always
possible to sustain a purely ceremonial adop-
tion. For instance, Edelman’s (1992) study of
organizations that initially decoupled the
Employment Equity and Affirmative Action
Legislation revealed that the adopted struc-
ture eventually affected practice, leading to
real structural change. Employees that were
hired into the formal structure tried to fulfill
their mandate even if it was meant to be
entirely symbolic. They elaborated formal
structures and created visible symbols of
compliance in an effort to interpret what it
meant to comply. This finding poses new
interesting questions about whether or not
decoupling is sustainable over time.
Decoupling may lead to full implementation
after some time simply because most
individuals refuse to see themselves as only
ceremonial props (Scott 2001). It seems
that an organizational image that is persist-
ently inconsistent with how organizational
members see themselves will eventually
provoke a corrective action (Dutton and
Dukerich 1991; Fiss and Zajac 2006).
However, if the adopted structure employs
no people, e.g. a stock-option programme,
then time passed may not affect the likeli-
hoood of actual implementation. Decoupling
may persist over very long periods of time.
It could be fruitful to investigate the condi-
tions under which organizations can continue
to decouple their structures from their
practices. This is all the more relevant for
organizations that rely on time to overcome
the tendency to decouple, such as in adopting
quotas to eliminate gender or race bias in
recruitment.
DISCUSSION –
CAUSAL RELATIONSHIPS
Our review of empirical studies on isomor-
phism and decoupling revealed that some
aspects of the initial theory formulations
have received empirical verification, while
 ISOMORPHISM, DIFFUSION AND DECOUPLING
others have been refined or qualified. The
past decades of empirical research have
consolidated and sharpened the sometimes
initially vague formulations of institutional
theory, but there are also important aspects
that have escaped scrutiny altogether. Most
striking is the limited research attention
that has gone into confirming some of the
core causal relationships of institutional
theory. A number of empirical studies have
in a piecemeal manner investigated theoreti-
cal concepts and mechanisms without ques-
tioning or verifying whether these generate
the theorized outcomes. One case in point is
that empirical examinations of institutional
isomorphism and decoupling have developed
along separate lines of inquiry, even though
these concepts are tightly coupled theoreti-
cally. Somewhat simplistically, inquiries
associated with institutional isomorphism
have explored the external consequences of
institutional pressures, i.e. organizational
similarity, whereas decoupling research has
investigated how organizations deal inter-
nally with institutional pressure for conform-
ity. Before we discuss the relationship
between the two terms, let us point out
some other causal relationships within each
line of inquiry that merit careful attention
in the future.
Isomorphism
Although institutional isomorphism has
attracted much research attention, a number
of causal relationships have not received the
careful empirical attention that they deserve.
First, there is the relationship between iso-
morphism and diffusion. There is a natural
empirical affinity between isomorphism and
diffusion, but this empirical affinity can be
theoretically treacherous. The majority of the
studies that invoke the concept of institu-
tional isomorphism has treated the diffusion
of a particular practice or structure as the out-
come variable of interest, under the implicit
assumption that diffusion leads to isomor-
phism. A research strategy that substitutes
89
the process of diffusion for the outcome of
isomorphism provides at best a limited test of
institutional isomorphism. Moreover, as
others have pointed out, the outcome of
similarity may also be explained by compet-
ing theoretical frameworks, particularly
resource dependence theory (Scott 1987;
Zucker 1987). It is important to the theoreti-
cal development of institutional theory that
the relationship between diffusion and iso-
morphism be sharpened significantly, both
theoretically and empirically.
A closely related point is that the causal
relationship between legitimacy and diffu-
sion also needs better articulation. Citing
Meyer and Rowan (1977), DiMaggio and
Powell (1983) explained that ‘as an innova-
tion spreads, a threshold is reached beyond
which adoption provides legitimacy rather
than improves performance’. While institu-
tional isomorphism presupposes that legiti-
macy is the driving force behind diffusion
(cf. Meyer and Rowan 1977), diffusion
may also occur without any legitimacy-
seeking behaviour. Not everything that
diffuses enhances organizational legitimacy.
For instance, organizations may replace an
existing structure with another one if they
receive a substantial state subsidy to do so.
They are neither forced, uncertain, or under
any moral obligation to do so, they simply
see an opportunity to control costs, and it
leads to isomorphism. While many organiza-
tions may adopt this structure, it is far-
fetched to argue that their adoption is an
example of institutional isomorphism when
it is not driven by legitimacy concerns.
Similarly, the causal relationship between
institutionalization and diffusion could bene-
fit from more clarification. In the widely
popular ‘two-stage model’ suggested by
Tolbert and Zucker (1983), diffusion is
assumed to lead to institutionalization. This
finding subsequently became established
within institutional theory as the ‘two-stage
model’ of institutionalization, which sug-
gests that a practice is introduced as the
result of an efficiency search, and then, as it
is adopted by others over time, it becomes
90 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
institutionalized and adoption efficiency
ceases to predict further spread (see for
instance Westphal, Gulati and Shortell 1997).
However, as pointed out by Scott (1995), a
sharp increase in the rate by which an inno-
vation is adopted need not reflect more insti-
tutionalization. The two-stage model of
institutionalization thus closely resembles
the standard two-stage diffusion model from
the 1950s (Katz, Levin and Hamilton 1963),
the main difference being that the contagion
phase is renamed institutionalization phase.
An important point is that there are plausible
alternative explanations to the second stage
in the diffusion phase, such as social-
level learning (Levitt and March 1988)
or other general ‘bandwagon’ processes
(Abrahamson and Rosenkopf 1993). To con-
vincingly demonstrate that a practice diffuses
quickly because it becomes institutionalized,
empirical research must provide other indica-
tors of institutionalization than a simple
increase in the number of adopters
(Schneiberg and Clemens 2006). It should be
shown that adoption is associated with
changing norms, collective beliefs or laws,
and studies should identify the conditions
under which diffusion is causally related to
institutionalization.
Future research should also address the
relationship between isomorphism and field
heterogeneity. The growing recognition of
heterogenity in the institutional environment
calls for reflection on how isomorphism fits
with the core claims of institutional theory. If
organizations become isomorphic with the
total complexity of their institutional
environment, as some studies suggest
(Goodrick and Salancik 1996; Heimer 1999),
then the notion of isomorphism resonates
with predictions of ‘requisite variety’ in
early population ecology and systems-
oriented theories (Scott 2004). This possi-
bility prompts the provocative (and evoca-
tive) question of whether institutional
isomorphism still has a place as a distinct
theoretical and empirical concept (cf. Kraatz
and Zajac 1996). We think it does, but insti-
tutionalists need to sharpen core concepts
and core causal relationships to avoid that
institutional theory becomes an ambiguous
umbrella-term for assorted organization
theory. There is currently a tendency for
institutional theory to expand into dimen-
sions of organizational life that have
traditionally been associated with other theo-
ries. While such expansion may enrich
institutional theory by making it more com-
prehensive, it also draws attention away from
clarifying core causal relationships. The
causal relationships among isomorphism,
diffusion, legitimacy, and institutionalization
need to be strengthened significantly. Herein
lies an important challenge for future
theoretical and empirical research, one that
we think should take precedence over expan-
sion of the scope of institutional theory.
Decoupling
Although there is less empirical research on
decoupling than there is on institutional iso-
morphism, isomorphic pressures and diffu-
sion, we have seen a surge in attention to
decoupling in recent years. There is reason to
believe that this trend will continue as insti-
tutionalists pay increasing attention to orga-
nizational and individual factors in the
processes of institutionalization and deinsti-
tutionalization. Decoupling research may
reveal the seeds of an endogenous model of
institutional change, but first the notion of
decoupling needs clarification and alignment
with isomorphism.
Meyer and Rowan defined decoupling as a
deliberate disconnection between organiza-
tional structures that enhance legitimacy and
organizational practices that are believed
within the organization to be technically effi-
cient. Some empirical studies have inter-
preted structure to include organizational
elements such as programmes, policies,
images and decisions. In so doing they came
very close to confounding decoupling with
the more general notion of ‘loose couplings’
(cf. Weick 1979). The theoretical idea of
organizations as loosely coupled systems is
 ISOMORPHISM, DIFFUSION AND DECOUPLING
more comprehensive in scope than the idea
of decoupling in institutional theory. Studies
that examine weak links between changing
organizational practice and organizational
decision making (e.g. Child, 1972) are thus
better characterized as studies of loose
coupling than of institutional decoupling.
Studies of decoupling need to be distinguish-
able from studies of loosely coupled organi-
zations in a similar manner to the need for
empirical studies of institutional isomor-
phism to be distinguishable from diffusion
studies.
The aspect of decoupling that has received
most attention so far is what predicts or
mediates the act of decoupling. As our
review revealed, some organizational vari-
ables have already been identified; they
include perceived advantages of decoupling,
internal power dynamics, and concerns
about the organizational image. In addition,
empirical research has identified inter-
organizational variables such as external
network formations and the power of exter-
nal stakeholders. We think more attention
should be devoted to investigating the
interaction among the already identified
variables that seem to predict or mediate
institutional decoupling, though it may also
prove fruitful to consider other organiza-
tional or inter-organizational variables. The
unintended effects of decoupling, such as
whether it affects morale and fosters cyni-
cism within the organization, certainly merits
attention as well. Furthermore the central
prediction of decoupling that organizations
actively avoid evaluation would imply that
entire groups of (isomorphic) organizations
collectively embrace opaqueness in structure
and actions. Such a broad prediction would
be interesting to verify empirically, perhaps
also to contrast with recent movements
towards greater transparency and accounta-
bility, not least in public management. As
there has been virtually no scholarly atten-
tion paid to this topic, this is an area of
research that should be particularly fruitful.
Some field-level variables also seem to
influence the likelihood of decoupling,
91
though the pattern is still obscure. Late
adopters seem more likely to engage in
decoupling than early adopters, but why is
this the case? Perhaps organizational or indi-
vidual variables explain this pattern, perhaps
power relations within a field influence the
likelihood of decoupling. Is there a ‘middle-
status conformity’ situation (Philips and
Zuckerman 2001) or does a central position
in the field makes it more illegitimate for an
organization to engage in decoupling? Or is
decoupling directly correlated with isomor-
phism in such a way that decoupling
becomes more common once the field
reaches a certain point of maturity? Attention
to the causal relationship between isomor-
phism and decoupling has been almost
entirely neglected so far and should be given
priority in future research.
The neglect of how isomorphism and
decoupling relate to each other may well
contribute to widening the gap between
agentic and non-agentic approaches in insti-
tutional theory. This gap also increases when
empirical studies investigate only one level
of analysis at a time. Individual and organi-
zational levels of analysis are most common
in agentic studies whereas non-agentic stud-
ies are more likely to use the field, the indus-
try, or the nation as the level of analysis.
Naturally, the gap will decrease if more
empirical studies use a multi-level approach
(cf. Schneiberg and Soule 2004). Perhaps the
first step is to theoretically formulate how
isomorphism and decoupling relates to one
another in light of the initial theory formula-
tions and the past decades of empirical
research. The variables that correlated with
decoupling in empirical studies can certainly
inform this research agenda, in addition to
representing an area where our knowledge of
decoupling needs to be furthered in future
research.
Other institutional perspectives
Our review is based on ‘journal institutional-
ism’, or what can be called mainstream
92 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
institutional organization analysis, where
there is a predominance of U.S. research and
researchers (cf. Mizruchi and Fein 1999).
Other incarnations of organizational institu-
tionalism have developed in parallel to main-
stream institutionalism, although these are
often less widely known and accessible as
they tend to be written in languages other
than English. We want to recognize these
writings because they address some of the
shortcomings of mainstream institutional
theory, such as an excessive focus on
mimetic processes, insufficient attention to
the study of practice, and limited use of qual-
itative methods. As we know of one specific
type, Scandinavian institutionalism (for an
overview see Czarniawska and Sevón 1996;
Czarniawska and Sevón 2003), we briefly
review some of the main points where we see
that Scandinavian institutionalism can offer
interesting and complementary perspectives
on the core themes of our review.
A Scandinavian tradition of institutional-
ism emphasizes the study of organizational
practice and engages researchers in reflective
theorizing that also takes into account the
role of the observer. One line of argument is
that isomorphism is an illusory effect of
particular research strategies that create
distance between the observer and the
phenomenon. For instance, when researchers
use archival data to study institutional change
over a period of several decades, they are
more likely to see something that looks like
isomorphism than if they had collected
observational data in a contemporary organi-
zation. In other words, the further distanced
the observer is, in terms of abstracting or
simplifying the object under study, the more
isomorphism there will seem to be (Forssell
and Jansson 2000). This stance would
explain the observation that the clearest evi-
dence of isomorphism is found within the
world systems literature, where the unit of
analysis is highly aggregated. In contrast,
case-based research provides excellent evi-
dence for the variation in organizational
response to institutional pressures
(for instance Djelic and Quack 2003; or
Sahlin-Andersson and Engwall 2003). For
instance, a historical analysis of Copenhagen
Business School showed that the organiza-
tion gradually absorbed elements of different
myths from their institutional environment,
which resulted in an organization that
embodies five different models that are
loosely coupled to one another (Borum and
Westenholz 1995). What appears as
decoupling may simply be a multi-faceted
organization that has conformed to changing
isomorphic pressures over a long period of
time while not fully discarding the old insti-
tutional elements.
The focus on organizational practice has
led Scandinavian institutionalism to engage
more readily with practice-oriented litera-
tures. The notions of loose couplings,
sense-making, actants and translation,
which are drawn from the work of Jim
March, Karl Weick, Bruno Latour and
Michel Callon, have importantly influenced
Scandinavian institutionalism. Decoupling
and translation have received much attention
in local research, perhaps accentuated by the
formation in 1988 of the Scandinavian
Consortium for Organizational Research
(Scancor) at Stanford University.
Another line of inquiry in Scandinavian
institutionalism is to apply an interpretive
angle to the study of institutions. According
to interpretivism, practice is always mediated
by an interpreter, whether the interpreter is
the object of study or the researcher conduct-
ing the study. For instance, research showed
that maverick film directors rely on their own
strategic interpretations when they decide to
differentiate themselves from other film
directors in the organizational field of film-
making (Alvarez et al. 2005). Similarly, key
players in the organizational field of Danish
hospitals strategically reinterpreted the same
institutionalized belief to fit their own
political preferences (Borum 2004). The
act of interpretation is not always conscious
and strategic, it is often implicitly governed
by institutionalized beliefs and norms. A
non-Scandinavian study on school teachers
in California showed, for instance, that
 ISOMORPHISM, DIFFUSION AND DECOUPLING
teachers’ preexisting beliefs and practices
implicitly mediated the nature of the message
that teachers delivered in the classroom
(Coburn 2004). The non-strategic approach
to interpretation, which is informed by Actor
Network Theory, is evident in the literature
on translation, which posits that ideas and
practices undergo change every time they
are applied in a new organizational con-
text (Czarniawska and Joerges 1996;
Sahlin-Andersson 1996). These interpretive
studies suggest that decoupling is an act of
interpretation that is shaped by contextual
and institutionalized factors. This line of
inquiry has gained international recognition
in recent years in parallel to increased
interest in how organizations respond to
institutional pressures.
CONCLUSION
This chapter presented the theoretical formu-
lations of isomorphism and decoupling and
carefully reviewed the empirical research
that has been conducted on these two central
theoretical concepts in institutional theory.
These are central concepts because they set
institutional theory apart from other organi-
zation theories. Isomorphism plays an
important role in organization theory as an
alternative to efficiency-based explanations
of organizational change (Scott 1987; Zucker
1987), and decoupling provides an explana-
tion for why organizations seem to be
constantly reforming (Brunsson and Olsen
1993). In a more general sense, these two
concepts have also moved structuralist and
cultural/symbolical understandings of organ-
ization closer to one another (Lounsbury and
Ventresca 2003; Scott 2001).
The first contribution of this chapter was
to delineate how empirical studies have
carved out the initial formulations of isomor-
phism and decoupling respectively. A related
contribution was to highlight some ambigu-
ous causal relationships that pertain to
theories of isomorphism and decoupling and
93
that merit careful attention in future research.
Disproportionate attention has been devoted
to studying the relationship between isomor-
phic pressure and diffusion, to the neglect of
the associated outcomes of decoupling
and/or isomorphism. An effect of this is that
some of the causal relationships that define
institutional theory have largely escaped
empirical inquiry. This limitation weakens
institutional theory and restricts its extension
into other levels of analysis that carry with
them new independent and intervening
variables. The greatest risk, as we see it, is
that institutionalism becomes a catch-all
phrase for various organization theories.
Institutionalists put the explanatory power of
institutional theory at risk if they do not
prioritize to validate the core claims of insti-
tutional theory before adding new layers of
complexity to its core claims.
An interesting discovery was that surpris-
ingly little attention has been devoted to
examining how isomorphism and decoupling
interact with each other. Organizations sup-
posedly adopt new organizational structures
to enhance their legitimacy, and then decou-
ple these same structures from their practices
to maintain technical efficiency in a compet-
itive quest for survival. We see real potential
in combining and juxtaposing what we know
about isomorphism and decoupling to
develop a stronger and more dynamic theory
of institutions. As we noted in our review,
many interesting questions have never been
asked. For instance, does decoupling become
more frequent when a field becomes more
isomorphic or mature? Perhaps the possibil-
ity of decoupling is crucial for obtaining a
high level of isomorphism in an organization
field. It is certainly possible that such
insights could provide answers to the vexing
question of how best to measure isomor-
phism. It may also open an intriguing avenue
for studying endogenous institutional change
processes without resorting to methodologi-
cal individualism.
Another striking finding of this review of
empirical studies is the conflation between
institutional studies and diffusion studies.
94 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
We noted that there is a close but compli-
cated relation between diffusion (i.e. the
spread of things) and isomorphism. In many
cases diffusion is a prerequisite for isomor-
phism, but diffusion need not always lead to
isomorphism; conversely all that looks simi-
lar need not be the result of diffusion
(cf. Zucker 1987). Isomorphism and diffu-
sion have often been conflated in empirical
studies where the spread of something is
treated as an outcome synonomous with iso-
morphism. It is commonplace to contrast
mimetic isomorphic pressure with efficiency
and/or resource dependence theory as an
explanation for the spread of a particular
form or practice (see for instance the well-
cited studies of Fligstein 1985; Haveman
1993; Palmer, Jennings and Zhou 1993). The
conflation of institutionalism and diffusion is
unfortunate because diffusion studies include
a larger set of phenomena where practices
are not necessarily adopted for legitimacy
gains. In contrast, legitimacy is central to the
kind of diffusion that pertains to institution-
alism, whether the outcome is isomorphism
or decoupling. We thus argue that the rela-
tionship between institutionalism and diffu-
sion needs more careful empirical and
theoretical parsing.
A final topic that is worth noting is the
growing recognition that institutional envi-
ronments are heterogeneous, just as are orga-
nizational responses to institutional pressure.
This trend makes for a lot of heterogeneity,
possibly more than the theory can sustain.
While there are a number of good studies that
argue forcefully for the need to include het-
erogeneity in institutional analysis, we find
precious little work that steps back from this
argument and considers the implications of
heterogeneity at various levels. One question
that arises is what will happen to studies of
organizational fields as the gap widens
between agentic and non-agentic institution-
alists. The former are migrating ‘down’ to the
organizational level or the individual level of
analysis, while the latter group is migrating
‘up’ into higher levels of analysis like institu-
tional logics and national business systems.
Will the organizational field level become
depopulated, or will other research commu-
nities migrate to this area of inquiry and take
on the challenging task of clarifying the link
between different levels of analysis?
A related fundamental question is whether
isomorphism is a useful and distinct theoret-
ical concept if we believe in a world of
fragmented institutional environments. For
instance, is institutional isomorphism a more
useful concept than that of ‘requisite variety’
that was proposed in the 1960s? If this
question is answered in the negative, then we
need to reflect upon how important the theo-
retical concept of isomorphism is to institu-
tional theory. Conversely, would the notion
of legitimacy still have meaning and be
sufficiently distinct without the assumption
of some form of homogeneity in the
organizational field?
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Institutional Logics
Patricia H. Thornton and William Ocasio
INTRODUCTION
The phrase, ‘institutional logic’ has become
somewhat of a buzz-word. Buzz words are
over used; as a result their meanings often get
distorted and overextended and they burn-out
of existence. Mizruchi and Fein (1999)
showed in the institutional theory literature
how meanings get distorted and then taken
for granted. To avoid misunderstandings of
the institutional logic concept and to build on
research in this genre, now is the time to
reflect on definitions and the theoretical and
methodological contributions this perspec-
tive brings to the analysis of institutions.
We begin by defining the concept of an
institutional logic and how it emerged as part
of the development of institutional theory
since the 1970s. Second, we illustrate the
institutional logics approach as both a meta-
theory and a method of analysis. Third, we
present a select review of the literature
emphasizing how the institutional logics
approach makes headway in addressing sev-
eral limitations and tensions identified by
scholars of institutional analysis. In this
review we focus on an analysis of the
implicit and explicit social mechanisms
employed in these studies, not on the
description or strength of their empirical
3
findings. Last, we critique the literature on
institutional logics and suggest how the
approach can be used to further advance the
study of organizations and institutions.
The research on institutional logics repre-
sents an impressive variety of empirical con-
texts, from thrifts (Haveman and Rao, 1997),
higher education publishing (Thornton and
Ocasio, 1999), health care organizations
(Scott et al., 2000), colleges and universities
(Gumport, 2000), consumer research
(Moorman, 2002), mutual funds (Lounsbury,
2002), French cuisine (Rao, Monin, and
Durand, 2003), equity markets (Zajac and
Westphal, 2004), accounting firms (Thornton,
Jones, and Kury, 2005), occupational prestige
rankings (Zhou, 2005), and architects (Jones
and Livne-Tarandach (Forthcoming), among
others. Given the incredible diversity of
research topics, what are institutional logics?
DEVELOPMENT OF INSTITUTIONAL
THEORY
To understand the concept of institutional
logics we must first place it within the con-
text of institutional theory and institutional
analysis. The study of institutions has a long
100 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
history in organizational analysis, beginning
with Selznick’s (1948, 1949, 1957) empirical
analyses of organizations and the institu-
tional environment, and Parson’s (1956)
theorizing, which emphasized how institu-
tions function to integrate organizations with
other organizations in society through uni-
versalistic rules, contracts, and authority.
In the 1970s a new approach to institu-
tional analysis emerged with Meyer and
Rowan (1977) and Zucker (1977), who high-
lighted the role of culture and cognition in
institutional analysis. From a macro perspec-
tive, Meyer and Rowan (1977) emphasized
the role of modernization in rationalizing
taken-for-granted rules, leading to isomor-
phism in the formal structures of organiza-
tions. Organizations had to conform to the
requirements of external environments for
legitimacy, meaning that parts of organiza-
tions had to be loosely coupled from their
technical core. Meyer and his colleagues
were concerned with the importance of
rationality in the account of western culture,
and viewed the development of formal orga-
nizational structures as part of world society
and its cultural system (Meyer, Boli, and
Thomas, 1987; Meyer, Boli, Thomas, and
Ramirez, 1997). From a micro perspective,
Zucker (1977) also emphasized the taken-
for-granted nature of institutions, and the role
of cultural persistence as a measure of insti-
tutionalization.
DiMaggio and Powell (1983) extended
Meyer and Rowan’s (1977) focus on isomor-
phism from the societal level to the level of
organizational fields. With their emphasis on
coercive, normative, and mimetic sources of
isomorphism, DiMaggio and Powell’s
approach led to an explosion of empirical
analysis. In DiMaggio and Powell (1983),
the effects of cognition are mainly viewed
through mimetic isomorphism – focusing on
mindless behavior in response to cultural
rationalization. Subsequently, what they
termed ‘the new institutionalism’ also
became largely identified with a rejection
of rationality as an explanation for organiza-
tional structure, and an emphasis on
legitimacy rather than efficiency as an
explanation for the success and survival of
organizations (Tolbert and Zucker, 1983).
Friedland and Alford’s (1991) seminal
essay, together with empirical work by
Haveman and Rao (1997), Thornton and
Ocasio (1999), and Scott et al. (2000),
created a new approach to institutional analy-
sis which posited institutional logics as
defining the content and meaning of institu-
tions. While the institutional logics approach
shares with Meyer and Rowan (1977),
Zucker (1977), and DiMaggio and Powell
(1983, 1991) a concern with how cultural
rules and cognitive structures shape
organizational structures, it differs from them
in significant ways. The focus is no longer on
isomorphism, whether in the world system,
society, or organizational fields, but on the
effects of differentiated institutional logics
on individuals and organizations in a larger
variety of contexts, including markets, indus-
tries, and populations of organizational
forms. Institutional logics shape rational,
mindful behavior, and individual and organi-
zational actors have some hand in shaping
and changing institutional logics (Thornton,
2004). By providing a link between
institutions and action, the institutional
logics approach provides a bridge between
the macro, structural perspectives of Meyer
and Rowan (1977) and DiMaggio and
Powell (1983) and Zucker’s more micro,
process approaches. Situated forms of
organizing are linked with beliefs and prac-
tices in wider institutional environments in
ways that address the critique of isomor-
phism and diffusion studies (Hasselbladh and
Kallinikos, 2000).
DEFINITIONS OF INSTITUTIONAL
LOGICS
We present definitions of the institutional
logics approach and then return to how it dif-
fers from the new institutionalism. The term
institutional logics was introduced by Alford
 INSTITUTIONAL LOGICS
and Friedland (1985) to describe the contra-
dictory practices and beliefs inherent in the
institutions of modern western societies.
They describe capitalism, state bureaucracy,
and political democracy as three contending
institutional orders which have different
practices and beliefs that shape how individ-
uals engage political struggles.
Friedland and Alford (1991) further devel-
oped the concept in the context of exploring
the interrelationships between individuals,
organizations, and society. They view
institutions as supraorganizational patterns of
activity rooted in material practices and
symbolic systems by which individuals and
organizations produce and reproduce their
material lives and render their experiences
meaningful. Rejecting both individualistic,
rational choice theories and macro structural
perspectives, they posited that each of the
institutional orders has a central logic that
guides its organizing principles and provides
social actors with vocabularies of motive and
a sense of self (i.e., identity). These practices
and symbols are available to individuals,
groups, and organizations to further elabo-
rate, manipulate, and use to their own advan-
tage (Friedland and Alford, 1991: 232, 248,
251–252).
For Friedland and Alford (1991) the core
institutions of society – the capitalist market,
the bureaucratic state, families, democracy,
and religion – each has a central logic that
constrain both the means and ends of individ-
ual behavior and are constitutive of individu-
als, organizations, and society. However,
while institutions constrain action they also
provide sources of agency and change. The
contradictions inherent in the differentiated
set of institutional logics provide individuals,
groups, and organizations with cultural
resources for transforming individual identi-
ties, organizations, and society.
A separate, albeit related, conception of
institutional logics was developed by Jackall
(1988). In his ethnographic analysis of ethi-
cal conflicts in corporations, Jackall (1988:
112) defines institutional logic as ‘the
complicated, experientially constructed, and
101
thereby contingent set of rules, premiums
and sanctions that men and women in partic-
ular contexts create and recreate in such a
way that their behavior and accompanying
perspective are to some extent regularized
and predictable. Put succinctly, an institu-
tional logic is the way a particular social
world works.’ Jackall, like Friedland and
Alford, views institutional logics as embod-
ied in practices, sustained and reproduced by
cultural assumptions and political struggles.
But the emphasis for Jackall is on the norma-
tive dimensions of institutions and the
intra-institutional contradictions of contem-
porary forms of organization; in contrast the
focus for Friedland and Alford is on
symbolic resources and the inter-institutional
contradictions of the inter-institutional
system, for example between the market and
the family and the professions and the
corporation.
Building on the developments of the
concept by both Jackall (1988) and Friedland
and Alford (1991), Thornton and Ocasio
(1999: 804) defined institutional logics as
‘the socially constructed, historical patterns
of material practices, assumptions, values,
beliefs, and rules by which individuals
produce and reproduce their material subsis-
tence, organize time and space, and provide
meaning to their social reality.’ According to
this definition institutional logics provide a
link between individual agency and
cognition and socially constructed institu-
tional practices and rule structures. While
Friedland and Alford’s approach is both
structural and symbolic, and Jackall’s is both
structural and normative, Thornton and
Ocasio’s (1999) approach to institutional
logics integrates the structural, normative,
and symbolic as three necessary and comple-
mentary dimensions of institutions, rather
than separable structural (coercive), norma-
tive, and symbolic (cognitive) carriers, as
suggested by alternative approaches
(e.g., Scott, [1995] 2001).
While varying in their emphasis, the vari-
ous definitions of institutional logics all
presuppose a core meta-theory: to understand
102 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
individual and organizational behavior, it
must be located in a social and institutional
context, and this institutional context both
regularizes behavior and provides opportu-
nity for agency and change. The various
dimensions of the meta-theory are further
elaborated in Section IV.
Precursors
Research sometimes referred to as logics of
action provides precursors to the institutional
logics approach – similarly being based on
an interdependent set of logics that provide
some context for social influence on actors’
actions in a domain. We highlight the exam-
ples that illustrate different logics of action
operating either within or between institu-
tional orders – Fligstein’s (1987, 1990) three
conceptions of control within corporate gov-
ernance, DiMaggio’s (1991) two conflicting
models to organize the field of art museums,
and Boltanski and Thevenot’s ([1986] 1991)
multiple modes of justification to evaluate
agreements situated between six different
worlds. In reviewing these examples note the
relatively early and similar dates of publica-
tion and that all the examples involve an
analysis of conflicting logics without focus-
ing on isomorphism.
Fligstein (1990) identified three competing
conceptions of control that guide the gover-
nance of large industrial firms: the manufac-
turing, marketing, and finance conceptions.
For Fligstein, both intra-organizational power
struggles (Fligstein, 1987) and field-level
struggles to control market competition and
contest state legislation shaped the formation
of these competing conceptions, or logics of
action. Executives’ views on how to best run
the corporation were selectively influenced
by their experience in the corporation.
Employees’ ability to fight it out among each
other in the rise to the top of the corporation
occurs in a Chandlerian (Chandler, 1962)
world of significant economic and industrial
change, organizational and professional inno-
vation, coupled with a powerful State.
The eventual result was that first manufactur-
ing, then marketing succumb in power and
control to those in finance. Updating his data
on corporate control, Fligstein (2001) devel-
oped a shareholder value conception of
control as distinct from the earlier finance
conception – shifting influences away from
the corporate venue to that of the market.
For Fligstein (1985, 1987, 1990), individ-
ual executives are the primary carriers of the
contending conceptions of control. However,
these conceptions may not be explicitly
institutionalized. For example, Ocasio and
Kim (1999) suggest that the alternative
conceptions of control were never institu-
tionalized in the organizational field, as none
of them became dominant. While Fligstein’s
work is similar to the institutional logics
approach because of its implicit interplay of
institutional sectors – the professions, the
corporation, and the State, the emphasis on
the utilitarian individual and the power-
oriented organization motivated subsequent
work leading to the institutional logics
approach that more systematically integrated
conflict and cultural perspectives.
In another example of logics of action,
DiMaggio (1991) develops ideal types of
organizing the organizational field of art
museums, the Gilman and the Data models,
to understand how competing cultural
models formed the basis of a power struggle
to redefine the field; a struggle between the
elite upper classes and their social circle of
collectors and curators and the new class of
museum professionals fueled by the expan-
sion of higher education in the fine arts. The
case reveals the structuration of organiza-
tional fields is a contested process between
these two cultural models. However, there is
an evolutionary ordering with the creation of
a standardized body of knowledge, the
organization of professional associations,
and the collective definition of a field, being
historically prior to the diffusion of the Data
Model.
Boltanski and Thevenot (1991) apply a
taxonomy of cultural repertoires that present
different justifications of worth to understand
 INSTITUTIONAL LOGICS
how people disagree, compromise, and
conclude more or less lasting agreements.
Identified with the tool kit school, they view
culture as a social resource that individuals use
strategically, culture is more than motivating
action – it also justifies it. Boltanski and
Thevenot illustrate in a variety of scenarios of
interactions that what is legitimate changes
depending on the context in which it is negoti-
ated and evaluated, the ideal types being six
different worlds – the inspired, domestic, fame,
civic, market, and industrial. Compromises are
less fragile when there is groundwork to
embed them in the specific arrangements of
these worlds assuming that the embedding is
congruent with the worlds. Transposing or
putting together elements extracted from the
descriptions of the various worlds of worth can
cause actors to be placed in incongruent or
compromising situations, depending on the
particular scenario. An intuitively awkward
example illustrates their point. ‘At home, to get
his children’s attention, a father presents a
glowing picture of his ability to direct a project
at work …. The first combines elements bor-
rowed from the domestic world (a father and
his children), from the world of fame (attract
attention, present a glowing picture), and from
the industrial world (ability to direct a project)
(Boltanski and Thevenot, 1991: 227). This is an
incongruous transfer of worth from different
worlds since fathers do not receive attention
based on industrial worth through the eyes of
their children.
Fligstein’s (1985, 1987, 1990), DiMaggio’s
(1991) and Boltanksi and Thevenot’s
([1986] 1991) approaches all posit the
existence of conceptions, models, or logics
at a supraorganizational level, and either
implicitly or explicitly emphasize the role
of culture in shaping and interpreting indi-
vidual and organizational activities. These
examples also illustrate the interrelationship
between individuals, organizations, and the
environment and how logics interpenetrate
multiple levels of analysis from the social
psychological to the levels of the organi-
zational field and societal sector. These
approaches are less focused, however, on the
103
role of institutions and institutionalization in
shaping logics than the approaches of
Friedland and Alford (1991) or Jackall
(1988). While sharing with the institutional
logics perspective a focus on culture as a
source of agency (Swidler, 1986; DiMaggio,
1997), these precursors differ from an institu-
tional logics approach by deemphasizing the
structural and normative constraints imposed
by institutional logics.
META-THEORY OF INSTITUTIONAL
LOGICS
The institutional logics approach incorpo-
rates a broad meta-theory on how institu-
tions, through their underlying logics of
action, shape heterogeneity, stability and
change in individuals and organizations. Not
all aspects of the meta-theory have been
incorporated into every application of the
institutional logics perspective, due to differ-
ences among authors in emphasis, and par-
tially to the limitations of the journal
publication process. Here we propose five
principles that in our judgment underlie the
meta-theory and provide opportunities for
theoretical development and refinement.
Embedded agency
Perhaps the core assumption of the institu-
tional logics approach is that the interests,
identities, values, and assumptions of indi-
viduals and organizations are embedded
within prevailing institutional logics.
Decisions and outcomes are a result of the
interplay between individual agency and
institutional structure (Jackall, 1988;
Friedland and Alford, 1991; Thornton and
Ocasio, 1999). While individual and organi-
zational actors may seek power, status, and
economic advantage, the means and ends of
their interests and agency are both enabled
and constrained by prevailing institutional
logics (Giddens, 1984; Sewell, 1992).
104 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
This assumption, which over time has
become known as embedded agency (Seo
and Creed, 2002; Battilana, 2006;
Greenwood and Suddaby, 2006), distin-
guishes an institutional logics approach from
rational choice perspectives on institutions
(North, 1990; Ingram and Klay, 2000) which
presume individualistic interests. This
assumption also distinguishes an institutional
logics approach from macro structural
perspectives which emphasize the primacy of
structure over action (DiMaggio and Powell,
1983; Meyer et al., 1987; Meyer et al., 1997;
Schneiberg and Clemens, 2006) and
Parsonian (Parsons 1956) perspectives on
institutions, which posit a separation of insti-
tutional from economic or technical sectors
(e.g., Meyer and Scott, 1983).
The embeddedness of agency presupposes
the partial autonomy of individuals, organi-
zations, and the institutions in society in any
explanation of social structure or action
(Friedland and Alford, 1991). Society
consists of three levels – individuals compet-
ing and negotiating, organizations in conflict
and coordination, and institutions in contra-
diction and interdependency. All three levels
are necessary to adequately understand soci-
ety; the three levels are nested (embedded)
when organizations and institutions specify
progressively higher levels of constraint and
opportunity for individual action.
Rather than privileging one level over
another, this perspective suggests that while
individual and organizational action is
embedded within institutions, institutions are
socially constructed and therefore consti-
tuted by the actions of individuals and organ-
izations (Berger and Luckmann, 1967). This
suggests that cross-level effects are critical.
One limitation, however, is that most
research, whether theoretical or empirical,
tends to emphasize one level over another.
Friedland and Alford (1991), despite their
direct call for multiple levels, emphasized the
role of the societal level. Recent work on
institutional entrepreneurship (Battilana,
2006; Greenwood and Hinnings, 2006)
has incorporated the relationship between
levels as an important mechanism for organi-
zational and institutional change.
Society as an inter-institutional
system
The main innovation of Friedland and Alford
(1991) is to conceptualize society as an inter-
institutional system. To locate behavior in a
context requires theorizing an inter-institu-
tional system of societal sectors in which
each sector represents a different set of
expectations for social relations and human
and organizational behavior. In Friedland
and Alford’s words, the capitalist market,
bureaucratic state, democracy, nuclear
family, and Christian religion are key institu-
tional sectors, each with its own distinct logic.
Thornton (2004: 44–45) elaborated this
typology in a review of a series of empirical
studies to include six sectors – markets,
corporations, professions, states, families,
and religions.
Viewing society as an inter-institutional
system allows sources of heterogeneity and
agency to be theorized and to be observed
from the contradictions between the logics of
different institutional orders. There is not just
one source of rationality, as in world systems
approaches (Meyer et al., 1997), but multiple
sources. Rather than positing homogeneity
and isomorphism in organizational fields, the
institutional logics approach views any con-
text as potentially influenced by contending
logics of different societal sectors. For exam-
ple, the health care field is shaped by the
institutional logics of the market, the logic of
the democratic state, and the professional
logic of medical care (Scott et al., 2000).
The inter-institutional system enables two
advances in institutional analysis. First, it is
non-deterministic, that is no institutional
order with its accompanying principles of
organization and logics of action is accorded
causal primacy a priori. Second, the inter-
institutional system provides researchers
with an understanding of the institutional
foundations of categories of knowledge.
 INSTITUTIONAL LOGICS
Key constructs in the analysis of organiza-
tion, such as efficiency, rationality, participa-
tion, and values are not neutral, but are
themselves shaped by the logics of
inter-institutional system. As posited by
Friedland and Alford (1991: 260) ‘Categories
of knowledge contribute to and yet depend
upon the power of institutions which make
them possible. Without understanding the
historical and institutional specificity of the
primary categories of analysis, social scien-
tists run the risk of elaborating the rationality
of institutions they study, and as a result
become actors in their reproduction.’
The material and cultural
foundations of institutions
A key assumption of an institutional logics
perspective is that each of the institutional
orders in society has both material and cul-
tural characteristics (Friedland and Alford,
1991). For example, both the family and reli-
gion, while typically not considered part of
the economic sphere, are directly involved in
the production, distribution, and consump-
tion of goods and services (Becker, 1976).
Similarly, markets, while often not consid-
ered part of the cultural sphere, are directly
shaped by culture and social structure,
including networks of social relationships as
well as structures of power, status, and dom-
ination (Granovetter, 1985). Rather than
privileging material or cultural explanations
of institutions, an institutional logics per-
spective recognizes that institutions develop
and change as a result of the interplay
between both of these forces.
In explaining human behavior and organi-
zational structure, Friedland and Alford
(1991) argued that theories which ‘retreat
from society,’ – emphasizing market mecha-
nisms to aggregate individual utilities and
preferences, organizational competition,
technology, and resource dependence – begin
to fail. Instead, institutional sectors, for
example families, professions, states, and
religions locate the origins of values and
105
utilities – and these values and utilities cannot
be traded off as simple economic alternatives.
Thus, an important underlying assumption is
not whether motivation and action are rational
or irrational; instead the argument is how the
comparative conflict and conformity of insti-
tutional logics (which are both material and
cultural) influence human and organizational
behavior (Thornton, 2002).
This assumption reflects a cultural turn in
the study of conflict and agency. This
cultural turn is motivated by the thorny ques-
tion of how individual agents know they have
economic or political struggles on their
hands and what is an appropriate way to
respond to them. For example, Thornton and
Ocasio (1999) and Thornton (2004) showed
that resource competition was actually
greater in higher education publishing in the
era of the editorial logic – but this competi-
tion was interpreted differently and
responded to in a non-conflictual manner.
With the rise of a market logic, resource
competition, although less significant, had
greater effects on organizational actions and
decisions. Stinchcombe (2002: 429) has
commented around this issue – needing
culture to define the meaning of power and
competition – viewing it as a causal sequenc-
ing problem. His argument is that if power is
theorized as a first-order construct in
explaining change, independently of culture,
two problems need to be addressed. First,
power is created in the course of action: it
does not occur prior to the action that it
explains. Second, the decision to use power
is an intentional, strategic choice; however, it
is not always possible for actors to know the
cultural framing or menus of available
options in advance of any action. Thus,
instrumental political theories of action may
be incomplete explanations because the
necessary sequence of events is unlikely
to occur. Consequently, cultural explana-
tions are necessary adjuncts to structural
explanations.
In making way for the role of culture
in shaping action, institutional logics
incorporate both the symbolic and the
106 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
normative components of culture. Following
Geertz (1973) and Douglas (1986),
DiMaggio and Powell (1991) and Friedland
and Alford (1991) highlighted the symbolic
and cognitive dimensions of institutions and
institutional logics. But symbolic and cogni-
tive explanations of institutions and institu-
tional logics are incomplete without also
incorporating the normative dimensions
(Hirsch, 1997; Mizruchi and Fein, 1999).
Sociologists, rejecting the strong view of
internalization of universalistic values and
cultural norms proposed by Parsons (1951)
and early Merton (1957), have been reluctant
to rely on social norms as an explanation for
behavior. Even DiMaggio and Powell (1983),
in discussing the normative forces driving
isomorphism, emphasized the role of formal
education, legitimating authorities, and
professional networks, with an unclear role
for social norms, per se. An institutional
logics approach, in contrast, emphasizes how
institutions provide social actors with a
highly contingent set of social norms
(Jackall, 1988), where behavior is driven
not by a logic of consequences but by a
logic of appropriateness (March and
Olsen, 1989).
The requirement of norms as a critical
dimension of institutions and their underly-
ing logics does not imply universalism,
moral behavior by individuals, nor deeply
internalized values, all part of Parson’s
(1951) conceptions of norms. An institu-
tional logics approach shares with
Granovetter (1985) and others the over-
socialized critique of Parsons, while at the
same time suggesting that ignoring norms
implies an under-socialized view of individ-
ual and organizational behavior. A focus on
identification (see below) as the mechanism
by which cultural norms exert their effects
over individuals and organizations
(Kelman, 1956, 2006; O’Reilly and
Chatman, 1996) distinguishes an institutional
logics approach from an over-socialized
conception of institutions that focuses on
internalization and value commitments and
an under-socialized conception that focuses
on resource dependencies and political
interests.
An institutional logics approach views
norms as drawn from experience and exem-
plars of the institution (Jackall, 1988; Ocasio,
1999). Norms imply ambivalence about uni-
versalistic principles, with both dominant and
subsidiary norms co-existing. This suggests a
probabilistic, rather than a deterministic view
of adherence to dominant norms of behavior,
and the identification of specific contingen-
cies where subsidiary norms prevail.
Institutions at multiple levels
The institutional logics approach as meta-
theory provides tremendous capacity to
develop theory and research across multiple
levels of analysis. For Friedland and Alford
(1991) the focus was on societal-level logics
and their effects on individuals and organiza-
tions. But the meta-theory that has emerged
is broader, and institutional logics may
develop at a variety of different levels, for
example organizations, markets, industries,
inter-organizational networks, geographic
communities, and organizational fields. This
flexibility allows for a wide variety of mech-
anisms to be emphasized in research and
theoretical development and may be one
reason the term institutional logics has
caught on among scholars (Kuhn, 1962).
Theoretical mechanisms are elements of
theory that operate at a different level of
analysis (e.g., individuals or organizational
fields), than the main phenomenon being the-
orized about (e.g., organizations or groups).
To identify the effects of mechanisms across
levels of analysis makes the theory more pre-
cise as well as more general (Stinchcombe,
1991). Therefore, to apply the institutional
logics meta-theory it is critical that the level
of analysis at which institutionalization
occurs be clearly specified, whether at a
societal level (Friedland and Alford, 1991),
or at other levels.
For example, Haveman and Rao (1997), in
their study of the coevolution of institutions
 INSTITUTIONAL LOGICS
and organizations in the California thrift
industry, studied how with the rise of
Progressivism, changes in institutional logics
at the societal level affected the formation of
distinct organizational forms at the industry
level. In particular, their analysis shows how
plans that embodied bureaucratic logics and
rational decision making were more likely to
thrive than those that embodied a community
logic and mutual cooperation among actors.
The emphasis here is on institutional logics
at the societal level affecting the selection of
alternative forms at the organizational level.
A secondary, and less developed, aspect of
the coevolutionary process in the paper sug-
gests that as organizational forms that
embody a particular institutional logic evolve
and become institutionalized at the industry
level, the corresponding societal-level insti-
tutional logics further evolves and becomes
further institutionalized.
The emphasis on societal-level institutions
is illustrated by the work of Bhappu (2000),
which draws on anthropological analysis of
the ancient Japanese family system to argue
how the institutional order of the family is
the origin of the institutional logic of
Japanese corporate networks. Scott et al.
(2000) examine how societal-level profes-
sional, government, and managerial-market
logics shape the transformation of the health
care organizational field, from one domi-
nated by professional logics to one where
the three logics co-exist and no single one
dominates.
In Jackall’s (1988) ethnographic analysis,
the emphasis is on institutionalization at the
organizational level. Here the focus in on the
structures of managerial careers and how
they shape the formation of a managerial
ethos that shapes decision making and action
in organizations. The formal structures of the
organizations combine with institutionalized
practices of fealty and patronage to create an
institutional logic termed patrimonial
bureaucracy. While clearly focusing on orga-
nizational-level institutionalized practices,
Jackall’s analysis suggests how these
practices also reflect cultural forces at the
107
societal level. Jackall argues that the formal
bureaucratic logic, as characterized by Weber
([1922] 1978), had little affinity with
American individualistic affinities and
cultural values, with the hybrid logic of
patrimonial bureaucracy thereby emerging.
Thornton and Ocasio (1999) focus on the
formation of industry-level institutional
logics in higher education publishing. They
propose that industries are a relevant bound-
ary for establishing institutional logics
because producers in an industry establish a
common identity through social compar-
isons, status competition, and structurally
equivalent network positions (White, 1992).
Their analysis and the subsequent research
by Thornton (2001, 2002) focus on the
effects of shifts, at the industry level, from an
editorial logic to a market logic. While focus-
ing on industry-level logics that both emerge
from and sustain market competition, these
logics do not emerge in the industry de novo,
but are shaped by higher-order societal
professional and market logics. The link
between industry-level logics and the logics
of the inter-institutional system is further
developed by Thornton (2004).
Research on institutional logics adopting a
field-level perspective has emphasized the
existence of competing logics within the
field. For example, in a qualitative analysis
of U.S. academic health centers, Kitchener
(2002) explores the effects of competing
managerial and professional logics on the
responses to merger initiatives. Reay and
Hinings (2005) adopt a similar approach in
their analysis of structural change in
Canadian health care organizations.
Greenwood and Suddaby (2006) focus
instead on contradictions between institu-
tional logics in organizational fields and
suggest that boundary bridging organiza-
tions are sources of change in institutional
logics (see below). Lounsbury (2007)
examines competing trustee and professional
logics in the mutual fund industry. In his
analysis geographic communities are also a
source of institutionalization of logic, as
Boston and New York are centers of the
108 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
trustee and professional logics respectively,
leading to different patterns of organizational
change in the two areas.
The variety of levels of analysis studied
suggests the fecundity of the institutional
logics perspective. The breadth of the meta-
theory may have encouraged imprecision in
research, and it could be inferred that any
logic or interpretive scheme, at any level of
analysis, may be characterized as an institu-
tional logic. We suggest otherwise.
Institutional logics are more than strategies
or logics of action as they are sources of
legitimacy and provide a sense of order and
ontological security (Giddens, 1984: Seo and
Creed, 2002). Research on competing
institutional logics, as some of the work on
organizational fields described above, often is
not precise on the level of which logics
become institutionalized, or whether they
should be considered institutional logics at all.
Historical contingency
Historical contingency is a key meta-theoret-
ical assumption of the institutional logics
approach. In general this assumption is con-
sistent with institutional theory, which focuses
attention on how larger environments affect
individual and organizational behavior. While
the six institutional orders of the inter-institu-
tional system in western societies previously
identified have remained influential, empiri-
cal observation also informs us that they
differed in development and importance over
time. For example, modern societies have
greater emphasis on corporate and state influ-
ences and earlier societies in general empha-
sized family and religion to a larger extent. In
particular, during the last 30 years the promi-
nence of market logics has been found in
multiple studies in various contexts, including
Thornton and Ocasio (1999) in higher educa-
tion publishing, Scott et al. (2000) in health
care, Lounsbury (2002) in financial interme-
diation, Zajac and Westphal (2004) in equity
markets, and Meyer and Hammerschmidt
(2004) in public management.
Zajac and Westphal’s analysis of historical
contingency in financial markets (2004) is
notable in viewing markets themselves as
shaped by institutional forces. The paper
finds that the emergence of an agency
perspective in the 1980s led to historical
shifts in stock market response to stock
repurchases, from an unfavorable reaction,
consistent with a professional logic, to a
favorable one, consistent with an agency
logic. The paper suggests that the market’s
reaction to particular corporate practices are
not, as financial economists contend, simply
a function of the inherent efficiency of such
practices, but are influenced by the prevail-
ing institutional logic.
However, note with the current rise of reli-
gion in world discourse that institutional
logics, both in their elaboration and relative
pattern of dominance between institutional
orders, are not simply an evolutionary or
linear model of development driven by scien-
tific progress or market rationalization. Here
the institutional logics approach departs dis-
tinctly from Meyer and his colleagues’ work
noted earlier on modern rationalization. For
example, Thornton, Jones, and Kury (2005)
illustrate other models of the historical
contingency of institutional logics that show
cyclical or punctuated equilibrium functional
forms in their comparison of the cases of
accounting and architecture.
Many studies reveal findings that are valid
in one historical time period but not in others.
Thornton (2004: 127) presents a meta-analy-
sis partitioning the findings on the higher
education publishing studies by universal
and particular effects. Founder and owner-
ship effects were found to be universal across
time, whereas relational and structural effects
were particular to a historical period in which
an institutional logic prevailed. Many find-
ings typically predicted by resource depend-
ence and economic theories are found to be
historically contingent. Note that the models
in this meta-analysis controlled for differ-
ences in organization age, size, and resource
competition and other macro economic
variables. Note also that the meta-analysis
 INSTITUTIONAL LOGICS
design controls for differences in industry,
product market, data set, population and
sampling methods, and statistical modeling
procedures. The universal founder effect
suggests the persistence of individual entre-
preneurs or leaders to hang tough on a logic
of action, regardless of contradictory logics
prevailing in their surrounding environment.
The objective of recognizing historical
contingency as a meta-theoretical assump-
tion is to explore if the effects of economic,
political, structural, and normative forces
affecting individuals and organizations are
indeed historically contingent. Moreover, the
goal is not to develop universal theories of
organizational behavior and structure but to
examine whether such theories, often
assumed to be universal through time and
space, are instead particular to historical time
and cultural environments (Thornton, 2004:
130–133).
INSTITUTIONAL LOGICS AS
METHOD OF ANALYSIS
Theory and methods go hand-in-hand and the
meta-theoretical principles reviewed in the
preceding section have been examined
through the creative development of meth-
ods. While many social science researchers
have been skeptical of cultural effects
(DiMaggio, 1994), in our view researchers
are rising to the challenges of measuring the
effects of content, meaning, and change in
institutions using the institutional logics
perspective. In this endeavor, we comment
on the use of event history analysis, interpre-
tive methods, triangulation, and ideal types.
Foundational studies have combined event
history (Tuma and Hannan, 1984) and inter-
pretive methods, for example from archival
records (Haveman and Rao, 1997), personal
interviews (Thornton and Ocasio, 1999), and
content analysis of professional journals
(Scott et al., 2000). Event history models typ-
ically use historical time (not organization
age) as the clock, particularly when historical
109
contingency is a focus of the analysis
(Thornton, 2004: 126–127). They also can
accommodate data at multiple levels of
analysis, for example at the individual, orga-
nizational, and environmental – making it
possible to partition material from cultural
effects (DiMaggio, 1994). The challenge of
measuring cultural effects is often
approached by examining how one or more
of the institutional orders of the inter-institu-
tional system are changing in its strength of
influence on individual and organizational
behavior. These types of studies require
identifying a scientific boundary to draw a
population or sample for hypothesis testing –
such as an industry, market, or profession.
Note that the organizational field concept is
problematic in this sense, unless it can be
defined, for example as a geographic
community, positional community, i.e. CEOs
of Fortune 500, or inter-organizational
network.
The development of interpretive methods
enriches the possibilities of the types of data
and data gathering methods available for
researchers to examine the content and
meaning of institutions. Scott et al. (2000),
for example. used content analysis of publi-
cations to identify the key terms important to
the actors of the professions and corporate
institutional orders of the health care system
and then measured the frequency of vocabu-
laries associated with the institutional orders,
signaling the emergence and decline of these
alternative institutional logics.
Phillips and Hardy (2002: 55) define
methods from discourse theory and describe
how they have been borrowed to further
develop institutional theory and methods.
Data sources include, for example, inter-
views, focus groups, archival documents and
records, naturally occurring conversations,
political speeches, newspaper articles,
novels, stories, cartoons, and photographs.
Methods of analysis include, for example,
genealogy, ethnography, conversation analy-
sis, content analysis, narrative analysis,
critical discourse analysis, and rhetorical
analysis that make use of a variety of ‘texts,’
110 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
including spoken words, pictures, symbols,
and cultural artifacts among others. Suddaby
and Greenwood (2005), for example, used
rhetorical analysis of vocabularies (words) to
expose contradictory institutional logics
embedded in historically different
understandings of professionalism to explain
the multidisciplinary partnership as a new
organizational form.
While this vibrant resurrection and devel-
opment of qualitative methods strengthens
the capacity to interpret meanings, we
caution that the strength of the foundational
studies of the institutional logics perspective
has been on triangulation of types of data and
methods of analysis – being reliant on both
qualitative and quantitative methods. One
method that integrates interpretive and
hypothesis testing approaches is the use of
ideal types.
Ideal types are a method of interpretive
analysis for understanding the meaning that
actors invest their actions with. They were
first developed by the classic theorists as a
theoretical tool to facilitate intelligible
comparisons (Weber, 1922). Researchers
have further developed this method of analy-
sis to suggest testable hypotheses (Thornton
and Ocasio, 1999).
In theory building, ideal types require the
development of formal typologies composed
of two parts: (a) the description of ideal types
and (b) the set of assertions that relate the
ideal types to the dependent variable (Dotty
and Glick, 1994). While often derived from
empirical observation, ideal types are not for
describing an organizational field, but
instead are theoretical models for comparing
the effects of various meanings in a location
with a definable boundary. They do not
precisely conform to reality because of
deliberate simplification to afford compara-
tive analysis and multidimensional classifi-
cation of phenomena not restricted by the
events of the selected cases. Ideal types
assign a hypothetical meaning that can be
used as a yardstick to compare and contrast
hypothesized and actual meaning and
behavior.
Swedberg (2005: 3), in drawing from
Weber, gives an example. ‘When the wood-
cutter brings down his axe on the wood, it
can be a case of wage labor, provision for
one’s household, or form of recreation – and
which one it is depends on the meaning with
which the action is invested.’ In the Appendix
we include examples of ideal types devel-
oped from the analysis of the effects of insti-
tutional logics in three industries, higher
education publishing, accounting, and
architecture.
DiMaggio’s (1991: 271) analysis of the
two models of organizing art museums is a
precursor to bringing back the use of ideal
types in institutional analysis. His categories
on the Y axis focused on the mission, defini-
tion of art, legitimate perception, education,
major publics, control, strategy, building, and
living artists – showing how the X axis spec-
ifies the Gilman and Data models varied on
these universal dimensions. Rao et al. (2003)
also used ideal types in their characterization
of classical and nouvelle French cuisine to
understand how new logics displaced old and
ushered in new role identities. Their
categories on the Y axis examine the dimen-
sions of culinary rhetoric, rules of cooking,
archetypal ingredients, role of the chef, and
organization of the menu – showing how the
X axis defined the two characteristics of
classical and nouvelle cuisines. However,
what is the causal connection between
DiMaggio’s and Rao et al.’s ideal types and
the inter-institutional system? Should we, for
example, intuit that the Gilman Model was
influenced by the institutional logics of the
family and the Data Model by the logics of
the professions and the state?
Thornton and Ocasio (1999: 808–809) and
Thornton (2004) explicitly anchor the higher
education publishing ideal types in the
domains (orders) of the inter-institutional
system – revealing their origins. Their
categories on the Y axis examined form of
capitalism, organizational identity, legiti-
macy, authority structures, mission, focus of
attention, strategy, logics of investment, and
rules of succession – showing how the X axis
 INSTITUTIONAL LOGICS
specifying the editorial and market logic
varied on these general elements.
Once derived from interview and archival
data they pushed the standards further
by externally validating the ideal types
with publishers’ experiences and their use
in the Stanford University Publishers
College.1
HOW LOGICS SHAPE INDIVIDUAL
AND ORGANIZATIONAL ACTION
Collective identities and identification
A mechanism by which institutional logics
exert their effects on individuals and organi-
zations is when they identify with the collec-
tive identities of an institutionalized group,
organization, profession, industry or popula-
tion (Tajfel and Turner, 1979; March and
Olsen, 1989). A collective identity is the
cognitive, normative, and emotional connec-
tion experienced by members of a social
group because of their perceived common
status with other members of the social group
(Polleta and Jasper, 2001). Collective
identities emerge out of social interactions
and communications between members of
the social group (White, 1992). As individu-
als identify with the collective iden-
tity of the social groups they belong to
they are likely to cooperate with the
social group (Tyler, 1999; Brickson, 2000),
abide by its norms and prescriptions
(March and Olsen, 1989; Kelman, 2006),
and seek to protect the interests of the collec-
tive and its members against contending
identities (Tajfel and Turner, 1979;
White, 1992).
Individuals are members of multiple social
groups with a collective identity, including
professions and occupations (Abbott, 1988;
Fine, 1996; Glynn, 2000), gender, racial and
ethnic groups (Cerulo, 1997; Lamont and
Molnar, 2002), social movements (Benford
and Snow, 2000; Rao et al., 2003), and indi-
vidual organizations (Selznick, 1957; Albert
and Whetten, 1985; Dutton and Dukerich,
111
1991). Collective identities also emerge
among populations of organizational
forms (Haveman and Rao, 1997; Carroll
and Hannan, 2000), market competitors
(Porac et al., 1989; White, 1992; Peteraf
and Shanley, 1997; Thornton and
Ocasio, 1999), and industry associations
(Aldrich and Fiol, 1994; King and Lenox,
2000).
As collective identities become institution-
alized, they develop their own distinct insti-
tutional logic, and these logics prevail within
the social group (Jackall, 1998). These
effects of institutional logics are emphasized,
among others, in the work of Haveman and
Rao (1997), on the theory of moral senti-
ments embodied in the collective identities of
organizational forms; in Thornton and
Ocasio (1999)’s shift from an editorial logic
to a market logic in the collective identity of
competitors in the higher education
publishing market; in Jones and Livne
Tarandach’s (Forthcoming) rhetorical
strategies of architects based in the institu-
tional logics of business, profession, and
state that focus attention on distinct
competencies – servicing clients, building
great architecture, or managing facilities, and
in Lounsbury’s (2002) analysis of collective
identities embodied in professional
associations in the field of finance. In
all of these cases, albeit at different
levels of analysis, identification with the
respective institutional logics occurs
directly, as the identification with the
collective is equivalent to the identifi-
cation with the institutional logic prevailing
in the collective, whether they are organiza-
tional forms, market competitors, or profes-
sional associations, or any other social
grouping.
Contests for status and power
The contests for status and power are rela-
tively universal mechanisms for individual
and organizational actions. However, an
institutional logics perspective suggests that
these mechanisms are conditioned by pre-
vailing institutions (Fligstein, 1996;
112 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Thornton and Ocasio, 1999; Lounsbury and
Ventresca, 2003). While power and status
differences are present in all organizations,
researchers can identify the sources of power
and status, their meaning and consequences
by understanding how these power and status
differences are associated with the prevailing
institutional logic. Institutional logics shape
and create the rules of the game, the means-
ends relationships by which power and status
are gained, maintained, and lost in organiza-
tions (Jackall, 1988; Ocasio, 1999;
Lounsbury and Ventresca, 2003). Social
actors rely on their understandings of institu-
tional logics in the competition for power
and status and in doing so generate the
conditions for the reproduction of prevailing
logics.
For Jackall (1988), competition for power,
status, and position in organizations shapes
the creation and reproduction of a patrimo-
nial bureaucratic logic in U.S. corporations.
Managers, driven by career concerns, estab-
lish and maintain a system of patronage and
fealty, where strong social ties to those in
position of authority determine power and
privilege in organizations. Achieving career
success requires social actors to play by the
rules, with language use and symbolic
management serving to reproduce the formal
structure, while promotion patterns parallel
the patrimonial structure, serving to
reproduce the informal status hierarchies and
power structures.
Thornton and Ocasio (1999) focus on the
link between institutional logics and power
structures. They find that under an editorial
logic, publishers’ means and ends are shaped
by author-editor relationships, and power
structures are determined by organization
size and structure. Under a market logic,
publishers’ means - end relationships are
shaped by resource competition and acquisi-
tions, and power structures are determined by
competition in the product market and the
market for corporate control.
Lounsbury (2002) focuses on status
competition and status mobility in the field
of finance. A shift from a regulatory logic to
a market logic created a shift from status
driven by reputation within business practice
to reputation driven by normative conformity
to increasingly mathematical economics.
Professional finance associations led the
transformation to a market logic in this field.
New professions such as money management
and securities analysis helped diffuse
new financial theories such as portfolio and
risk management, and status within the
field became increasingly determined by
familiarity and expertise with new financial
theories. As social actors gained status and
position by their reliance on financial theo-
ries, the market logic gained prominence in
the field.
Zhou (2005) relies on an institutional logic
perspective to explain occupational prestige
ranking. Building on Weber’s argument that
social statuses or social honors are related,
but distinct from one’s economic resources
or structural positions, Zhou is searching for
an explanation of how a hierarchical ordering
of occupations must be recognized through a
meaning system shared by members of the
same community. He proposes an institu-
tional logic of social recognition to explicate
the causal mechanisms. What is appropriate
and legitimate must be seen as transcend-
ing self-interests and group boundaries, and
be accepted by a large audience. Overall,
occupation prestige should vary system-
atically with the basis for making legitimate
claims and with group membership
as a function of their inclusion into the
realm of a shared institutional logic (Zhou,
2005: 98).
Classification and categorization
A key mechanism by which institutional
logics shapes individual cognition is through
social classification and categorization
(DiMaggio, 1997). Cognitive psychologists
emphasize the importance of categories in
shaping individual cognition (e.g., Rosch,
1975; Medin, 1989). While psychologists
who study categories typically emphasize the
study of categories of objects occurring in
nature, the classification and categorization
 INSTITUTIONAL LOGICS
of social and organizational categories is
determined by social institutions (Douglas,
1986; Searle, 1995). Given the institutional-
ization of categories, individuals take for
granted that the categories of organizing
activity such as CEO, return on assets,
human resources, corporate governance,
multidivisional structures, patents,
restaurants, to name but a few common sub-
jects of study, are not categories that exist in
nature but socially constructed, institutional
categories (Berger and Luckmann, 1967).
Institutional logics provide agents within
organizations with socially constructed
systems of classifications that constitute
categories of social actors (Mohr and
Duquenne, 1997), organizational forms
(Haveman and Rao, 1997), products
(Lounsbury and Rao, 2004), and organiza-
tional agendas (Ocasio and Joseph, 2005).
Changes in institutional logics lead to the
creation of new categories (Rao et al., 2003)
and to changes in meaning of existing cate-
gories (Ruef, 1999; Ocasio and Joseph,
2005). Categories, as a basic unit of cogni-
tion, do not imply mindless cognition, as do
schemas and scripts, but are a necessary
component of all mindful, agentive behavior.
Mohr and his collaborators have
emphasized the link between systems of
categories and institutional logics. Mohr and
Duquenne (1997) analyze the changing insti-
tutional logics in poverty relief by examining
how they provide a different system of
classification of the poor (distressed, desti-
tute, fallen, deserving, homeless, indigent,
misfortunate, needy, poor, stranger, and
worthy) and the categorization of organiza-
tional practices (giving advice, giving food,
giving money, paying a person to chop wood,
placing a relief applicant in an asylum,
and so on). Mohr and Guerra-Pearson
(Forthcoming) studied how categories of
actors, organizational forms, and organizing
activities varied by competing institutional
logics. Breiger and Mohr (2004) develop
network methodologies among systems of
categories to empirically measure institu-
tional logics.
113
Categorization processes have been partic-
ularly central to work on institutional logics
that focuses on logics residing in competing
organizational forms (Haveman and Rao,
1997; Rao et al., 2003). Distinct categories of
forms are shaped by changes in societal level
institutional logics (Haveman and Rao,
1997). At the organizational field level,
Rao et al. (2003) explore how changes in
the categories of French cuisine led to
self-categorization by industry entrepreneurs
and triggered institutional transformation.
Rao et al. (2005) explored how organiza-
tional change occurs through bricolage
among categories of organizational products
associated with alternative institutional
logics.
Research has also explored how changing
logics lead to changes in the meaning of
existing categories. Ruef (1999) explores the
shift to a market logic in the heath care field
by examining the changing systems of
categories that underlie discourse among
technical, managerial, and policy-oriented
health care professionals. Ruef’s analysis
focuses on the relationships among linguistic
categories and finds that a historical shift
in logics results in changes in the meaning
of underlying categories of organ-
izational forms. With the rise of a market
logic there is increased integration of
issues of financing and risk bearing across
the various forms in the organizational field,
and less focus across the spectrum on
issues of access. With the rise of a market
logic the meaning of a hospital or a
health maintenance organization shifts, as do
other organizational forms, with less differ-
entiation among forms in their focus on
financing.
Attention
Contemporary perspectives on organiza-
tional attention emphasize how organiza-
tional responses to economic and social
factors are mediated by the attention of
organizational decision makers (Ocasio,
1995, 1997). Theoretical and empirical
research provides key mechanisms to explain
114 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
how institutions moderate organizational
attention.
In a theoretical analysis of how organiza-
tions respond to economic adversity, Ocasio
(1995) proposed that institutional logics
affect the allocation of attention to alternative
schemas for perceiving, interpreting, evaluat-
ing, and responding to environmental
situations. According to theory of allocation
of attention, institutional logics provide indi-
viduals and organizations with a set of rules
and conventions – for deciding which prob-
lems get attended to, which solutions get
considered, and which solutions get linked to
which situtations (March and Olsen, 1976).
Ocasio (1997) suggests two mechanisms by
which institutions structure attention: (1) by
generating a set of values that order the legit-
imacy, importance, and relevance of issues
and solutions; and (2) by providing decision
makers with an understanding of their
interests and identities. These interests and
identities generate in turn a set of decision
premises and motivation for action.
Thornton and Ocasio (1999) developed the
role of industry-level institutional logics in
structuring attention in organizational
decisions on executive succession. The
theory was further developed in application
to decisions on acquisitions (Thornton,
2001), and the rise of multidivisional
structures (Thornton, 2002) in the higher
education publishing industry. The core of
the argument in these empirical studies is
that institutional logics focus the attention of
decision makers on issues and solutions that
are consistent with prevailing logics.
Institutional logics focus attention on issues
and solutions through a variety of mecha-
nisms, including determining their appropri-
ateness and legitimacy, rewarding certain
forms of political behavior in organizations,
shaping the availability of alternatives, and
selectively focusing attention on environ-
mental and organizational determinants of
change. A key finding of these empirical
analyses is that the effects of resource
competition and resource dependencies are
not universal effects, but are contingent on
organizational attention to market forces that
are salient under a market logic, but not
under an editorial logic. Thornton (2004:
44–45) further developed the role of institu-
tional logics in structuring attention by
linking these organization and industry level
analyses to societal-level institutional logics.
Relying on content analysis, Glynn and
Lounsbury (2005) examine the shifts in focus
of attention by newspaper critics of the
Atlantic Symphony Orchestra from an
aesthetic logic prior to a strike at the orches-
tra to a market logic post-strike. Consistent
with the effects of institutional logics on
attention, they find that pre-strike newspaper
critics, in their reviews, focus attention on the
virtuosity and musical interpretation (associ-
ated with an aesthetic logic) and post-strike
critics increased their attention to ticket
sales, production of recordings, and audience
reactions (consistent with a market logic).
The ascendancy of the market logic did not
imply, however, a rejection of aesthetic con-
cerns, but the blending of the two logics.
In his study of competing logics in the
mutual funds industry, Lounsbury (2007)
relies on attention as a mechanism to show
how non-growth funds and Boston-based
funds focus attention on the issue of product
costs, while growth funds and New York-
based funds focus attention on the issue of
fund performance. The empirical results sup-
port this argument, demonstrating how the
effects of market forces are contingent on
prevailing organizational logics, as mediated
through processes of attention.
CHANGE IN INSTITUTIONAL
LOGICS
‘How can actors change institutions if their
actions, intentions, and rationality are all
conditioned by the very institution they wish
to change’ (Holm, 1995: 398). The institu-
tional logics approach sheds light on this
problem of embedded agency by conceptual-
izing society as an inter-institutional system
 INSTITUTIONAL LOGICS
in which logics are characterized by cultural
differentiation, fragmentation, and contradic-
tion (DiMaggio, 1997). This differentiation,
fragmentation, and contradiction is
evident both within and between institu-
tional orders (Friedland and Alford, 1991).
We focus on three mechanisms of change:
institutional entrepreneurs, structural
overlap, event sequencing, and a fourth
topic, often an antedecent or conse-
quence of change – competing institutional
logics.
Institutional entrepreneurs
Institutional entrepreneurs are the agents that
create new and modify old institutions
because they have access to resources that
support their self-interests (DiMaggio,
1988). By definition, institutional entrepre-
neurs can play a critical role in perceiving
institutional differentiation, fragmentation,
and contradiction by virtue of the different
social locations they may occupy in the inter-
institutional system and in taking advantage
of the opportunities it presents for institu-
tional change (Thornton, 2004). Fligstein
(1997), for example, describes how entrepre-
neurs perceive and exploit contradictions in
institutional logics to further their self-
interest. DiMaggio (1988: 14–15) argues that
the creation of institutions requires an
institutionalization project in which the
claims of institutional entrepreneurs are sup-
ported by existing or newly mobilized actors
who stand to gain from the success of the
institutionalization project (DiMaggio,
1991). The challenge for the institutional
entrepreneur is to create an environ-
ment to successfully enact the claims of a
new public theory. Sometimes this involves
institutional entrepreneurs organizing from
the center of an established environment
(Suddaby and Greenwood, 2005) and at
other times it may stem from the periphery
of emerging fields (Maguire, Hardy, and
Lawrence, 2004).
However, the environments that institu-
tional entrepreneurs enact to garner control
of resources are not just material, they are
115
also symbolic. To use an analogy to the
bricoler (Levi-Strauss, 1966), institutional
entrepreneurs creatively manipulate social
relationships by importing and exporting
cultural symbols and practices from one
institutional order to another. In theory, the
different social locations of the institutional
orders bring to light different cultural tools
for institutional entrepreneurs (Thornton,
2004). Note the focus on cultural resources
as distinct from material resources; culture
being something people strategically use,
deploy, and mobilize. This focus is consistent
with the meta-theory of the institutional
logics approach which views culture as both
a motivation as well as a justification of
action.
There are several mechanisms that institu-
tional entrepreneurs use to manipulate cul-
tural symbols and practices, for example
story telling (Zilber, 2006), rhetorical
strategies (Suddaby and Greenwood 2005;
Jones and Livne-Tarandach, forthcoming),
and tool kit approaches (Swidler 1986;
Boltanski and Thevenot 1991).
Suddaby and Greenwood (2005) showed,
for example, in their study of organizational
forms in the accounting industry, how institu-
tional entrepreneurs used ‘rhetorical strate-
gies’ to reinterpret and manipulate prevailing
symbols and practices. Rhetorical strategies
or ‘institutional vocabularies’ were used by
entrepreneurs to affirm or discredit the dom-
inant institutional logic which defined the
legitimacy of organizational forms. To
discredit an institutional logic and bring
about institutional change, entrepreneurs
exposed the contradictions or ameliorated the
contradictions by associating them with
broader cultural analogies (Douglas, 1986;
Strang and Meyer, 1994).
In returning to Holm’s (1995) concern
with embedded agency, Leca and Naccache
(2006) argue from a critical realist
perspective that the concept of institutional
entrepreneur does not completely address
the paradox of embedded agency because the
concept by definition does not take
into account the interrelated sequencing of
116 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
structures and actions and the causal emer-
gent properties of both structures and
actions. They argue for a critical realist
approach in which actors use the causal
powers of pre-existing structures to
create new institutions or challenge exist-
ing ones. We highlight their important
insight as it motivates our subsequent discus-
sion of structural overlap and event
sequencing.
Structural overlap
Structural overlap occurs when individual
roles and organizational structures and func-
tions that were previously distinct are forced
into association (Thornton, 2004). Mergers
and acquisitions are an example of structural
overlap when organizational actors from
divergent cultures are forced into associat-
ion, triggering a change in institutional
logics guiding the firm. Structural over-
lap across systems with differentiated
logics creates contradiction in organiza-
tions and organizational fields, creating
entrepreneurial opportunities for institutional
change.
For example, Stovel and Savage (2005)
showed how a merger wave exposed compet-
ing institutional logics and triggered the elab-
oration of the modern, mobile, bureaucratic
career in the financial sector. Thornton,
Jones, and Kury (2005) illustrated how the
structural overlap when accounting firms
incorporated management consultants into
their organizations brought professional and
market logics head to head and conflicted the
focus of attention of accountants from over-
seeing the accuracy of client’s books to using
exposure to accounting ledgers to identify
consulting clients. Greenwood and Suddaby
(2006), in their analysis of a pioneering new
organizational form, the multidisciplinary
practice (MDP) within the field of business
services, theorize a case of structural overlap
in which elite organizations are more likely
to come into contact with competing and
contradictory logics because they bridge
different organizational fields. They point
out that this case of institutional change is
interesting because it is inconsistent with
extant theory which would predict
change from the periphery, not the center
of the field. They argue that contact
with institutional logics in multiple and
different organizational fields increases
the awareness of and experiences with
contradictions in logics, which lowers con-
straints and embeddedness of actors and
enables central actors to become institutional
entrepreneurs.
Event sequencing
Event sequencing is defined as the temporal
and sequential unfolding of unique events
that dislocate, rearticulate, and transform the
interpretation and meaning of cultural sym-
bols and social and economic structures
(Sewell, 1996: 844). For example, this can be
changes in cultural schemas, shifts of
resources, and the emergence of new sources
of power. As noted above, because structures
are often overlapping, any rupture has the
potential of cascading into multiple changes,
particularly when the events are character-
ized by heightened emotion, collective
creativity, and ritual. The accumulation
of events can result in a path-dependent
process in which shifts in the symbolic inter-
pretation of events are locked in place by
simultaneous shifts in resources. Such
sequencing produces more events that
reinforce or erode the dominance of the
incumbent logic.
Event sequencing has been used as an ana-
lytical method to address the problem of
embedded agency or what Barley and Tolbert
(1997) term conflation and the problem of
reducing structure to action or action to
structure. (How such event sequences inter-
sect to reveal causation has been extensively
examined in the literature on historical com-
parative methods of analysis (Abbott, 1990;
Griffin, 1992; Sewell, 1992, 1996)). There
are several ways to assess the impact of event
sequencing on institutional change –
for example, nominal and ordinal compar-
isons and narrative analysis (Mahoney,
1999). These are different strategies of
 INSTITUTIONAL LOGICS
macro-causal analysis – ways that
researchers iterate between theory and his-
tory in identifying the causes of an outcome.
The narrative analysis method is used to
understand the ordering of circumstantial
detail in searching for analogies that are the
foundation for new and convincing accounts.
In the institutional logics literature, it is the
institutional orders of the inter-institutional
system that provide the meta-theory which
points to these analogies and that prevent the
analysis from getting bogged down in the
minutia of historical details.
For example, the case of the change in
institutional logics in higher education
publishing from 1958 to 1990, from an
editorial (based in the logics of the family
and the professions) to a market logic,
reveals the causally linked events that inter-
acted to produce a shift in the prevail-
ing institutional logic (Thornton, 2004).
Event sequencing is also shown to play
a role in institutional change in the account-
ing profession (Thornton, Jones, and
Kury, 2005). Hoffman and Ocasio (2001)
theorize what determines public attent-
ion to events that trigger institutional
change.
So what are the implications of individuals
and organizations in a sea of cultural fragmen-
tation and contradiction? It means that to
study cultural institutions researchers need a
theoretical framework that can accommodate
how individuals’ norms may deviate from
norms at higher levels of analysis, for example
at the level of individuals as distinct from cor-
porate management or professional associa-
tions (DiMaggio, 1997: 265). This multi-level
and multi-contextual requirement calls for a
theory that conceptualizes how to partition
‘units of cultural analysis’ and the relations
among them (Holm, 1995). We argue that the
inter-institutional system is well suited to this
task because each institutional order has dis-
tinct organizing principles, cultural symbols,
and logics of action that clarify how to define
units of cultural analysis. Culture is not just
amorphously out there in ‘thin air’ as per the
critique of culture as a world system, nor is
117
culture a monolithic and coherent influence on
actors that results from socialization (Parsons,
1951). Instead, conceptualizing society as an
inter-institutional system implies that the insti-
tutional orders have modularity and decom-
posable elements. The decomposable nature
of institutional logics allows for theorizing the
fragmented and contradicted nature of cultural
influences, revealing this not only at different
levels of analysis, for example individuals and
organizations, but also in specific contexts in
which individuals actively import and export
elements of institutional logics across institu-
tional orders (Thornton, 2004). Thus, the
decomposability of the elements of the inter-
institutional system makes it possible to
observe the influence of cultural institutions
from the standpoint of the vertical coherence
and fragmentation of different levels of
analysis, not only bottom up or top down
(Schneiberg and Clemens, 2006), but also
from the horizontal blending and segregating
of the elements of different orders of the
inter-institutional system. This, for example,
enables theorizing institutional change
processes such as bricolage, which is the
creation of new practices and institutions
from different elements of existing institutions
(Levi-Strauss, 1966). Thus, in returning to the
question of embedded agency, the institutional
entrepreneur does not disembed from the
social world to create change – structures and
actions are separable (Leca and Naccache,
2006), allowing institutional entrepreneurs to
hop and bridge from one social world to
another. Our review leads us to be encouraged
that literatures on organizations and culture
are converging, creating these fresh views on
the topic of agency.
Competing logics
A focus on competition between alternative
institutional logics has guided research on
institutional change. This diverse literature
encompasses a wide variety of mechanisms
to explain the effects of competing logics on
change, including environmental selection
pressures, political contestation, and social
movements. We emphasize that competing
118 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
logics are not, by themselves, an explanation
for change in institutional logics but an
antecedent or a consequence. Moreover,
competing logics can facilitate resistance to
institutional change as in the case of the con-
test between the institutional logics of global
corporate and local professional banking
(Marquis and Lounsbury, 2007). The causal
mechanisms for institutional change reside
not in competition per se, but on a combina-
tion of the effects of market selection pres-
sures, power of institutional actors,
and changes in the relative prevalence of
societal-level institutional logics, which
unfortunately in many studies is typically
unspecified.
Much work has utilized both case and
quantitative studies of competing logics in
professional and occupational domains, for
example finance, health care, accounting,
and culinary. Comparing and contrasting
studies across professional and occupational
contexts reveals the vibrant ecology of
competing institutional logics of the inter-
institutional system.
Early research by Haveman and Rao
(1997) on mutual funds, described above,
adopted a selection meta-theory, positing
how environmental selection pressures
favored organizational forms more congruent
with their institutional environments.
Similarly, the Scott et al. (2000) historical
account of the Bay Area health care system is
exemplary in describing institutional change
from a setting once dominated by the institu-
tional logics of the medical professions to
one greatly influenced by the logics of the
state, the corporation, and the market. Their
study shows how the logics of the state in
terms of new regulatory systems disempow-
ered those of the professions, in particular
the more powerful and higher priced MDs,
creating an avenue for managers of corporate
logics in the form of managed care and new
organizational forms such as Health
Maintenance Organizations (HMOs), Point
of Provider Organizations (PPOs), and surgi-
centers to become commonplace in the
health care system.
Other studies on competing institutional
logics highlight power struggles among pro-
ponents of alternative logics. Reay and
Hinings’ (2005: 375) description of the
Alberta Canada case of health care services
bears similarities. Their lens focuses on a
recomposition of an organizational field in
which competing institutional logics of med-
ical professionalism versus business-like
health care is driving a radical change
process. They conceptualize the organiza-
tional field as a battlefield where power
struggles motivated by competing institu-
tional logics get played out. The structure of
the field and the dominant institutional logic
changed, but the previously dominant logic
of medical professionalism was only sub-
dued rather than eliminated. The power
ended up being distributed between the two
powerful actors – the physicians and the gov-
ernment – creating a countervailing or stabi-
lizing tension.
Meyer and Hammerschmid (2006: 1012)
analyze to what extent an old administrative
orientation is being replaced with a new
managerial logic in the Austrian public
sector. They trace institutional change by
observing how state bureaucrats make use of
social identities that are derived from com-
peting institutional logics. They have found
evidence of the formation of a new manage-
rial identity created by individuals who
mixed a new orientation with more orthodox
beliefs on public administration.
Research on competing logics has also
incorporated a social movement perspective.
For example, Rao, Monin, and Durand
(2003) show how social identity movements
underpin reinstitutionalization in the culinary
professions by contrasting the institutional
logics of the classic and nouvelle cuisine
movements. Change in logics and change in
the adherence to a logic take place through
four mechanisms, the sociopolitical legiti-
macy of food critics as activists, the theoriza-
tion of new roles, prior defections by peers
and gains to peers, and gains to defectors as
identity-discrepant cues. In essence, institu-
tional logics and professions undergo change
 INSTITUTIONAL LOGICS
when activists gain control of professional
societies, critique the traditional logic, and
proffer a solution hinging on a new institu-
tional logic. Note, the theory doesn’t fore-
shadow why critic activists chose to engage
in an institutional deconstruction project.
One can surmise the influence of other social
movements that are supported by other
domains in the professions and even other
institutional orders, for example the more
generic health movement.
Overall, the studies of competing institu-
tional logics focus either on strategies of
action at a lower level of analysis, for exam-
ple an organizational field, for example Reay
and Hinings (2005), or on how a higher-
level institutional logic at the societal-sector
level transforms strategies of action in a
lower-level domain, for example Haveman
and Rao (1997) and Meyer and
Hammerschmid (2006). This difference may
be partly reflected in the research design, for
example the qualitative study of a case versus
the quantitative analysis of a specific instan-
tiation of an institutional order. These differ-
ences may also be reflected in how the
camera lens is focused. That is, if you get
close to the action as qualitative researchers
are able to do, one is more likely to interpret
the action as a power struggle when indeed it
may also reflect the operation of higher-level
institutional forces.
MISCONCEPTIONS REGARDING
INSTITUTIONAL LOGICS
With respect to the institutional logics
approach there are several misconceptions in
our view that we feel compelled to comment
on. One is a continued juxtaposition between
institutional and market structures (e.g.,
Greenwood and Suddaby, 2006). While mar-
kets are economic structures – they are also
institutions. They function because of a set of
formal laws and normative expectations
about them and these normative expectations
have changed through time and space.
119
A market in one historical and cultural con-
text is not the same as a market in another
(Fligstein, 1996). Similarly non-market
institutions, such as professions, the family,
and religion are also economic structures and
are not independent from market forces
of demand and supply (Friedland and Alford,
1991).
Second, institutional logics do not emerge
from organizational fields – they are locally
instantiated and enacted in organizational
fields as in other places such as markets,
industries, and organizations. Institutional
logics stem from the institutional orders of
the inter-institutional system (Friedland and
Alford, 1991), not as commonly miscon-
strued from an organizational field (Scott,
2001: 139). Institutional logics through
various mechanisms may get reshaped and
customized in an organizational field.
However, an organizational field is a level of
analysis; it is a place where institutional
logics get played out, but not by itself a
theoretical mechanism. Friedland and Alford
(1991: 244) have commented around this
issue:
defining the boundaries of an organizational field,
within which there are strong pressures for
conformity, is difficult and potentially tautological.
The approach seems to assume that formal
attributes of organizational fields can be specified
independently of the institutional arena in which
they are located. But, we would argue, it is the
content of an institutional order that shapes the
mechanisms by which organizations are able to
conform or deviate from established patterns.
These institutional orders, and the specific relations
between them, delimit types of organizational
fields.
Third, ideal types are not a description of
what happens in an organizational field. Ideal
types are formal analytical models by which
to compare empirical observations across
institutions. Therefore, ideal types are best
developed at least in pairs, if not multiple
characterizations. Instead, often what are
often mischaracterized as ideal types are a
description of a particular case study rather
than a set of findings that can be refuted or
generalized and aggregated.
120 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Fourth, most studies of institutional logics
do not in some way tie their analyses back to
the institutional orders of the inter-
institutional system. This is partly due to
page limitation requirements of the journals
and a focus on other alternative units of
analysis. In other cases it appears due to the
authors who do not focus on causal relation-
ships both up and down stream. To simply
and briefly recognize these multi-level
relationships is important to further the
development of the institutional logics
approach as it systematically advances and
foreshadows questions for future study. For
example, why do culinary critics, the lynch
pin of the four mechanisms that begin the
shift in chef identities, decide to favor
nouvelle over classic cuisine? Are these
critics, for example, increasingly under
market pressures or have professional pres-
sures changed in some way?
SUGGESTIONS FOR FUTURE
RESEARCH
The main intellectual hurdle in institutional
analysis is in many respects the same as it is
for sociological theory more generally. We
need to better understand how macro-level
states at one point in time influence individ-
uals’ orientations to their actions, prefer-
ences, beliefs; how these orientations to
action influence how individuals act; and
how the actions of individuals constitute the
macro-level outcomes that we seek to
explain. Moreover, how does the stability of
institutional logics change systematically by
level of analysis – is it more stable or change-
able at the top or bottom, macro- or micro-
level of analysis? This is a big theoretical
question.
We need more work on the microfounda-
tions of institutional logics. Work on institu-
tional logics is inherently cross-level,
highlighting the interplay between individu-
als, organizations, and institutions. While the
embedded agency of actors is a key meta-
theoretical assumption, as discussed above, a
fully developed perspective on institutional
theory requires increased attention to its
microfoundations. DiMaggio’s (1997) paper
on culture and cognition is a start, providing
a link between the microfoundations of
cognitive processes and the cultural
structures inherent in institutional logics. But
cognitive theory is only part of the story. The
Carnegie School is another source and the
recent call for a neo-Carnegie perspective
may also yield answers (Gavetti, Levinthal,
and Ocasio, 2007). Given the rejection of
rational choice theory, how embedded inter-
ests, identity and commitments play a role is
an important topic for further theoretical
development and empirical research.
New methodologies that make use of
web-based experiments show promise in
research linking levels of analysis and also in
partitioning causes and effects by level of
analysis, helping to specify the underlying
theoretical mechanisms (Thornton, 2004).
For example, Salganik, Dodds, and Watts
(2006) show the micro-macro linkages in
how people select songs. This partitioning
also should address the meta-theoretical
assumption of incorporating both the
material and cultural. However, incorporating
both is not enough – what is needed is theory
and methods to partition these effects – that is
to understand the autonomy of culture from
economy (DiMaggio, 1994).
Future research needs to move beyond
implicit assumptions and to engage explicit
discussion of the underlying theoretical
mechanisms, that is the clear identification of
the ‘gears and ball bearings behind the statis-
tical models’ (Davis and Marquis, 2005).
Without formalization of the theory and
methods, studies of institutions cannot build
upon or invalidate one another and the social
science of institutions cannot grow systemat-
ically (Pfeffer, 1993). Instead, it will be
forgotten as it was in the past (Hughes, 1939;
Selznick, 1949, 1957).
Most research on institutional analysis has
revealed the effects of market rationalization
or state regulation; the latter is more about
resource dependence than institutional analy-
sis. In theory, other underlying patterns of
institutional change should exist. Given the
 INSTITUTIONAL LOGICS
interpenetration of institutions across levels
this raises the question of what implications
this has for the rise of market logics in soci-
etal sectors where you would not expect to
see markets operating, such as in the case of
families and the rising salience of religions in
a world system.
Institutional change occurring in the
global multi-national context provides fertile
ground for new research. Contrary to
Friedland and Alford's (1991) formulation,
the institutional logics perspective and in
particular the inter-institutional system is an
analytical tool not limited to expectations of
Western culture. It is also useful in analyses
of international contexts as evidenced by
recent applications examining the influence
of cross-national institutional logics on
employee training (Luo, 2007) and business
group restructuring in emerging economies
(Chung and Luo, forthcoming).
We think there is a healthy growth of
measurement strategies of institutional logics
on the horizon. Most quantitative research on
institutional logics has relied on indirect
measures of institutional logics, attempting
to bolster this approach by combining
research methodologies and triangulating
historical and interview methodologies with
quantitative methodologies. Content analytic
methodologies by Scott et al. have been
attempted, albeit these have not been
incorporated directly into the literature.
Research on vocabularies and cultural
structures provide opportunities in this area
and the use of techniques employed in mar-
keting such as focus groups and the field test-
ing of ideal types. More cross-over research
is needed between network and institutional
scholars as network methodologies offer a
well-established set of methods that can be
used for direct measurement of the meaning
of cultural categories (Breiger and
Mohr, 2004).
How institutional logics become institu-
tionalized and deinstitutionalized continues
to be a vibrant vein of work. Synthesis of the
state of what we know in this realm is
needed. While work on institutional change
has focused on the role of competing logics
121
in institutional change, we need work on
institutional logics, at various levels, organi-
zations, industries, fields, societies, and
world systems can themselves be institution-
alized and deinstitutionalized. In examining
this issue it is important to distinguish
between changes in logics and changes in
practices. What constitutes an institution
remains an unresolved conceptual issue
for the field. How and why actors manipulate
and switch institutional logics and in
particular cases in which manipulations and
switches are not supported by cultural
analogy are important empirical papers to
anticipate.
CONCLUSION
With the exception of DiMaggio and
Powell’s (1983) theory of isomorphism,
institutional theory has lacked coherence.
Subsequently, two papers have affected the
abandonment of isomorphism theory and the
cognitive meta-theory espoused by
DiMaggio and Powell (1991), namely that of
Kraatz and Zajac (1996) and Hirsch’s (1997)
(in our judgment inaccurate) critique of
Scott’s ([1995] 2001) emphasis on the cogni-
tive perspective. The impact of these papers
left institutional theory adrift with Scott’s
‘carriers’ perspective. As a result, much of
what is called institutional theory these days
is not very institutional at all. Instead it is
about resource dependencies, political strug-
gles, social movements, and other mecha-
nisms which, while important, are really
about non-institutional forces driving institu-
tional change. Within this political sociolog-
ical vein, culture is relegated to the narrower
topic of how groups and social movements
make use of rhetoric and framing to be
persuasive (Suddaby and Greenwood, 2005).
The institutional logics approach provides an
important remedy to this theoretical drift
away from institutional effects, by highlight-
ing how the cultural dimensions of institu-
tions both enable and constrain social action.
We review how the institutional logics
approach is a systematic way to theorize and
122 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
measure the influence of institutions on indi-
vidual and organizational behavior. Without
positing isomorphism or organizational sta-
bility, the institutional logics approach offers
precision in understanding how individual
and organizational behavior is located in a
social context and the social mechanisms that
influence that behavior. By categorizing soci-
etal influences as an inter-institutional
system, previously tractable issues such as
embedded agency and institutional change
can be better addressed. Through the use of
increasingly sophisticated methods of inter-
pretive analysis, most notably the use of ideal
types and discourse analysis coupled with
quantitative modeling techniques, the institu-
tional logics approach is well positioned to
continue to address the questions of the cog-
nitive meaning of culture and institutions.
An important advantage of the institu-
tional logics approach as meta-theory is its
systematic means to associate various theo-
ries (explanations) of organization and action
in which institutions and their effects and
how actors constitute institutions can be
understood and measured objectively – they
can be heard, recorded, classified, and asso-
ciated with a set of actors and strategic
actions.
In this review we focused on an analysis of
the implicit and explicit social mechanisms
in a variety of studies, not on the description
or strength of their empirical findings. Our
approach was guided by believing that the
advancement of institutional analysis in the
social sciences requires an analytic, not a
descriptive approach, that ‘explains’
observed associations between individuals,
organizations, and societies.
NOTES
1 Publishers included among others, Len
Louchow, former CEO of Jossey-Bass, and John
Davis, former head of the Prentice-Hall College
Division. Louchow used the ideal types in teaching
the leadership course for the Stanford University
Publishers College.
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APPENDIX
Table 3.1 Ideal types of institutional logics in public accounting
Characteristic
Economic system
Sources of identity
Sources of legitimacy
Sources of authority
Basis of mission
Basis of attention
Basis of strategy
Logic of investment
Governance mechanism
Institutional entrepreneurs
Event sequencing
Structural overlap
Table 3.2 Ideal types of institutional logics in architecture
Characteristic
Economic system
Sources of identity
Sources of legitimacy
Sources of authority
Basis of mission
Basis of attention
Basis of strategy
Logic of investment
Fiduciary logic
Personal capitalism
Accounting as a profession
Reputation of CPAs
Standardization & conservatism
Professional association
Government regulation
Build legitimacy of public corporation
Build prestige of partnership
Selling legitimacy
Standardize and authenticate
client financial statements
Build legitimacy of profession
CPA partnership
CPA ownership
British: Waterhouse,
Young, Niven
American: Haskels, Sells, Andersen
1896–1921 State CPA
legislation
1933, 1934 Securities Acts
1938 SEC Accounting Series
Release no. 4
Intentional reduction of overlap
CPA – Lawyers in tax practice
Aesthetic logic
Personal capitalism
Architect as artist–entrepreneur
Reputation of architect
Aesthetics of design
Design prowess
Build personal reputation
Build prestige of firm
Resolve design problems and
entrepreneurial challenges
Increase prestige of patron or
government sponsor
Win design competitions
Build wealth and prestige of
entrepreneurs
Corporate logic
Managerial capitalism
Accounting as an industry
Scale and scope of firm
Management committee
Managing partners
Government regulation
Build seasonal stability of firm
Build status position of firm through growth
Selling services
Generating profits
Growth through mergers and acquisitions
Differentiate on client service
Build wealth & career of partners
Private corporation
Majority CPA ownership
Big 8 accounting firms
World War II
1965–1975 Consolidation to Big 8
Corporate merger wave
1970s–1980s FTC ruling on open competition
1980s–1990s Consolidation to Big 5
2001 Enron collapse
2001 Andersen bankruptcy
CPA – Consulting
CPA – Lawyers in tax practice
Efficiency logic
Managerial capitalism
Architect as engineer–manager
Scale and scope of firm
Efficiency and economics of design
Managing partner or supervisor
Build multidisciplinary firm
Build market position of firm
Resolve technological and organizational
challenges
Increase number of corporate clients
Build recurring clientele
Increase markets for services
Build wealth of partners
Continued

Continued
Table 3.2 Ideal types of institutional logics in architecture
Characteristic
Governance mechanism
Institutional entrepreneurs
Event sequencing
Structural overlap
Table 3.3 Ideal types of institutional logics in higher-education publishing
Characteristic
Economic system
Sources of identity
Sources of legitimacy
Sources of authority
Basis of mission
Basis of attention
Basis of strategy
Logic of investment
Governance mechanism
Institutional entrepreneurs
Event sequencing
Structural overlap
INSTITUTIONAL LOGICS
Aesthetic logic
Entrepreneurial firm (atelier)
Profession
H. H. Richardson, R. M. Hunt,
R. R. Ware, Robert Venturi
1857 Founding of
Architecture profession
1893 Chicago Fair reinforces
aesthetic of Beaux Art tradition
1967 Postmodernism treatise rejects
aesthetic of minimalism
Professions – architects,
engineers, and contractors
Clients – government and
wealthy individuals as patrons
Editorial logic
Personal capitalism
Publishing as a profession
Personal reputation
Education value
Founder–editor
Personal networks
Private ownership
Build prestige of house
Increase sales
Author–editor networks
Organic growth
Build personal imprints
Capital committed to firm
Family ownership
Trade association
Prentice Hall
Richard Prentice Ettinger
Increased public funding to education
Increased college enrollments
Wall St. announces good investment
1950–1960s Prentice Hall internal
corporate ventures and spin-offs
1960s acquisitions wave
129
Efficiency logic
Partnership ownership
Private global multidisciplinary
corporation
Louis Sullivan, Wm Le Baron Jenney,
Walter Gropius, Mies Van der Rohe
Increased immigration and industrialization
1871 Chicago Fire provides commercial
building opportunities
World War I provides building
opportunities and implementation of
new aesthetic which rejects history
World War II immigration of modernist
architects to U.S.
Professions – architects, engineers, and
contractors
Clients – real estate speculators and
corporations
Market logic
Market capitalism
Publishing as a business
Market position of firm
Share value
CEO
Corporate hierarchy
Public ownership
Build competitive position of
corporation
Increase profits
Resource competition
Acquisition growth
Build market channels
Capital committed to market return
Market for corporate control
Thomson
Michael Brown
Founding of boutique investment
bankers
Founding of publishing finance
newsletters
1980s acquisitions wave

Organizational Fields: Past,
Present and Future
Melissa Wooten and Andrew J. Hoffman
INTRODUCTION
The term ‘institutional theory’ covers a broad
body of literature which has grown in promi-
nence and popularity over the past two
decades. But consistency in defining the
bounds of this activity has not always been
easy. The lament of DiMaggio and Powell in
1991 still holds true today: ‘it is often easier
to gain agreement about what it is not than
about what it is’ (1991: 1). There are a great
number of issues that have and continue to
remain divisive within this literature and
among related literatures that apply institu-
tional arguments (i.e. economics, political
science, and history). What these literatures
have in common, however, is an underlying
skepticism towards atomistic accounts of
social processes, relying instead on a convic-
tion that institutional arrangements and
social processes matter in the formulation
of organizational action (DiMaggio and
Powell, 1991).
At its core, the literature looks to
the source of action as existing exogenous
to the actor. More than merely suggesting
that action is a reaction to the pressures of the
4
external environment, institutional theory
asks questions about how social choices are
shaped, mediated and channeled by the insti-
tutional environment. Organizational action
becomes a reflection of the perspectives
defined by the group of members which
comprise the institutional environment; out
of which emerge the regulative, normative,
and cultural-cognitive systems that provide
meaning for organizations (Scott, 1995,
2001). Action is not a choice among unlim-
ited possibilities but rather among a narrowly
defined set of legitimate options. As an
organization becomes more profoundly
aware of its dependence on this external
environment, its very conception of itself
changes, with consequences on many levels.
As this happens, Selznick states, ‘institution-
alization has set in’ (1957: 7). Hence,
institutionalization represents both a process
and an outcome (DiMaggio, 1988).
While not highly emphasized in early
institutional analyses (i.e. Selznick, 1949,
1957), the central construct of neo-
institutional theory has been the organiza-
tional field (Scott, 1991). Strictly speaking,
the field is ‘a community of organizations
that partakes of a common meaning system
 ORGANIZATIONAL FIELDS: PAST, PRESENT AND FUTURE
and whose participants interact more fre-
quently and fatefully with one another than
with actors outside the field’ (Scott, 1995:
56). It may include constituents such as the
government, critical exchange partners,
sources of funding, professional and trade
associations, special interest groups, and the
general public – any constituent which
imposes a coercive, normative or mimetic
influence on the organization (DiMaggio and
Powell, 1991; Scott, 1991). But the concept
of the organizational field encompasses
much more than simply a discrete list of con-
stituents; and the ways in which the institu-
tional literature has sought to capture this
complexity has evolved over the past
decades, and continues to evolve. In this
chapter, we present this evolution, discussing
the past, present and future of this important
construct. We illustrate its early conceptual-
ization and present its progression in a way
that invites scholars to both consider their
work within this historical trajectory and
contribute to its further development. We
conclude the chapter with our thoughts on
promising avenues for future research within
this domain.
ORGANIZATIONAL FIELDS:
EARLY INCARNATIONS
For early neo-institutional theory, the central
unit of analysis was variously referred to as
the institutional sphere (Fligstein, 1990),
institutional field (Meyer and Rowan, 1977;
DiMaggio, 1991), societal sector (Scott and
Meyer, 1992), and institutional environment
(Orru, Biggart and Hamilton, 1991; Powell,
1991). But the term organizational field
(Scott, 1991) has become the accepted term
for the constellation of actors that comprise
this central organizing unit. Like Bourdieu’s
field (1990, 1993), where an agent’s actions
within the political, economic, or cultural
arena were structured by a network of social
relations, institutional theorists conceptual-
ized the organizational field as the domain
131
where an organization’s actions were struc-
tured by the network of relationships within
which it was embedded (Warren, 1967).
Warren used the example of community
organizations such as banks, welfare organi-
zations, churches, businesses, and boards of
education, working in conjunction with one
another to elucidate the importance of taking
the ‘interorganizational’ field as a unit of
analysis. By focusing attention on this level
of analysis, researchers could better under-
stand the decision making processes among
distinct organizations that, while having
dissimilar goals, felt it necessary and advan-
tageous to interact with one another to
accomplish a given task.
As studies of interorganizational relations
evolved, scholars broadened the field to
include organizations that were not necessar-
ily bound by geography or goals, but instead
made up a recognized area of institutional
life. These could include organizations that
produced similar services or products,
suppliers, resource and product consumers,
regulatory agencies, and others (DiMaggio
and Powell, 1983). What these organizations
had in common was that they comprised a
community of organizations that partook of a
common meaning system and whose partici-
pants interacted more frequently and
fatefully with one another than with other
organizations (Scott, 1995). Such evolving
definitions focused on the organizational
field as a means to understand the impact of
rationalization on organizations.
The behavior of organizations within
fields was said to be guided by institutions:
the cultural-cognitive, normative, and regula-
tive structures that provided stability and
collective meaning to social behavior (Scott,
1995). These structures acted as ‘social facts’
which organizational actors took into
account when determining appropriate action
(Zucker, 1977; Meyer and Rowan, 1983).
The transmission of social facts from one set
of actors to another caused them to take on a
rule-like and taken-for-granted status and
thus become institutionalized (Zucker,
1977). Once a social fact had become
132 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
institutionalized, it provided actors with tem-
plates for action which created unified or
monolithic responses to uncertainty that led
to isomorphism; a commonality in form and
function (DiMaggio and Powell, 1983).
The central notions of organizational field
research focused on understanding the
processes that guided the behavior of field
members in unconscious ways.
Meyer and Rowan (1977) suggested that
the incorporation of elements (i.e. structures,
practices, procedures, etc.) from the institu-
tional environment imbued an organization
with legitimacy. Thus, for example, ‘admin-
istrators and politicians champion programs
that are established but not implemented;
managers gather information assiduously,
but fail to analyze it; experts are hired not for
advice but to signal legitimacy’ (DiMaggio
and Powell, 1991: 3). An organization that
appeared legitimate increased its prospects
for survival because constituents would not
question the organization’s intent and pur-
pose. As increasing numbers of organizations
incorporated common institutional elements,
most (if not all) organizations at the field
level became homogeneous in structure,
culture, and output (DiMaggio and Powell,
1983). Much of the research using this notion
of the organizational field centered on the
premise that organizations sought survival
and legitimacy as opposed to efficiency
(Orru, Biggart and Hamilton, 1991).
For example, Fligstein (1990) depicted the
industry-wide transformation of executive
leadership in America as resulting from shift-
ing pressures from the government.
DiMaggio (1991) cited the causes for the
accepted form of art museums in American
cities in the 1920s and 1930s as the result of
efforts by museum workers to define a pro-
fession through conformity to demands from
foundations, particularly the Carnegie
Foundation. Leblebici, Salancik, Copay and
King (1991) argued that the generation and
acceptance of practices and technologies
within the American radio broadcasting
industry were the result of the actions of
influential industrial actors. And Tolbert and
Zucker (1983) looked to the spread of civil
service reforms at the turn of the twentieth
century as resulting from the pressure of
legal requirements or the examples set by
fellow cities.
Early field-level analyses allowed some
degree of diversity in action, based on
primacy in institutional adoption. For exam-
ple, first adopters within a community of
organizations tended to take action out of
concerns for efficiency. But, later adoptions
followed a different diffusion process with
adoption of structures and practices designed
to mimic the behavior of prior adopters.
Tolbert and Zucker’s (1983) study of the
adoption of civil reforms by cities provides
an exemplar of this phenomenon. Their study
found that characteristics such as the percent-
age of foreign-born residents and the size of
the city influenced the adoption of civil serv-
ice reforms thought to improve city function-
ing in the early phases of the municipal
reform movement. However, over time the
city demographics no longer influenced the
adoption of such reforms. The authors
concluded that, in the later periods, civil
service reforms had taken on a legitimated
status and as such, became viewed as a nec-
essary signal of a properly functioning
municipal system.
Much work in the organizational field
arena sought to identify institutionalization
by contrasting the adoption of practices for
rational or institutional motives, and by
detecting how the quest for collective ration-
ality led to homogeneity within field-level
populations. Of particular interest was the
role of the state and the influence of
the legal/regulatory environment in leading
organizations to collectively develop appro-
priate responses that ultimately led to unifor-
mity in organizational form or structure.
For instance, Edelman (1992) studied
organizations subject to affirmative action
and equal employment opportunity legisla-
tion. This legislation required organizations
to incorporate members from historically
underrepresented groups into their hierarchy.
Yet, the ambiguity of the legislation did not
 ORGANIZATIONAL FIELDS: PAST, PRESENT AND FUTURE
specify how an organization should demon-
strate its compliance (i.e. how an organiza-
tion could demonstrate that it had indeed
incorporated women, racial/ethnic, and reli-
gious minorities into its operations). In
response to this uncertainty, field-level actors
pushed for the creation of Affirmative Action
and Equal Employment Opportunity
(AA/EEO) offices as a way to demonstrate
their compliance with the new regulations.
As other field members – namely the govern-
ment – took the establishment of an AA/EEO
office as evidence of compliance, the adop-
tion of these offices became widespread. A
similar process also led to the implementa-
tion of grievance systems (Sutton and
Dobbin, 1996), internal job markets (Dobbin,
Sutton, Meyer and Scott, 1993) and mater-
nity leave policies (Kelly and Dobbin, 1999).
After focusing on the mimetic and regula-
tive forces which led to adoption and isomor-
phism within an organizational field,
institutional research took the so-called ‘cog-
nitive turn’ (Lindenberg, 1998; Meindl,
Stubbart and Porac, 1994). Work within the
organizational field domain turned towards
understanding the cultural and cognitive
processes that guided field members’
behavior. Researchers sought to uncover the
material practices and symbolic construc-
tions that served as organizing templates for
field members (Friedland and Alford, 1991).
These field-level ‘logics’ provided organiza-
tions with schemas to guide their behavior.
For example, Marquis (2003) highlighted
the cultural-cognitive templates that guided the
construction of inter-corporate network ties.
Firms located in communities that began before
the era of auto and air travel had more locally
based director connections than firms located
in communities that began after auto and air
travel became prevalent. Moreover, this logic
of locally based network ties continued to guide
the behavior of the firms in older communities
long after auto and air travel became prevalent.
In other work, Thornton (2001) studied
the evolution of logics within the higher
education publishing industry and found that
acquisition patterns varied according to which
133
logic dominated the industry. When a market-
logic dominated the industry, publishers that
followed an imprint strategy and those with
distribution contracts faced a greater risk of
acquisition than other publishers. Yet, when an
editorial-logic dominated the industry, imprint
and distribution strategies had no significant
effect on a publisher’s likelihood of being
acquired, suggesting that, as the field-level
logic changed, the acquisition behavior of the
organizations within the field changed as well.
While the Marquis and Thornton studies
highlighted the temporal dimension of cogni-
tive processes, another study by Davis and
Greve (1997) highlighted the corresponding
spatial dimensions by noting that cognitive
perceptions regarding the legitimacy of a cor-
porate practice varied based on the social and
geographic distance among managers and
board of director members. The implementa-
tion of the golden parachute, a practice that
provided protection to top managers in the
event of a hostile takeover, spread among
firms within the same region, whereas the
adoption of a poison pill, a practice that made
hostile takeover prohibitively expensive,
spread among firms that shared a board of
director tie. Their investigation suggested
that the proximity of actors affected the dif-
fusion of firm behavior within a field.
Throughout this early stream of research,
the overarching emphasis on similarity
remained a constant. The organizational field
was conceived as predominantly static in its
configuration, unitary in its makeup and
formed around common technologies, indus-
tries, or discrete network ties (DiMaggio,
1995; Greenwood and Hinings, 1996).
Regulative, normative and cognitive influ-
ences bred homogeneity in the aggregate.
But this emphasis within the literature soon
became the subject of criticism.
ORGANIZATIONAL FIELDS:
PRESENT CONFIGURATIONS
Beginning in the late 1990s, scholars argued
that the institutional literature placed too
134 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
much emphasis on the homogeneity of orga-
nizational populations and not the processes
that created this outcome (Hirsch, 1997).
This focus on isomorphism as the ‘master
hypothesis’ (Hoffman and Ventresca, 2002)
was seen by many as an unfortunate outcome
of early theory development and the misrec-
ognized empirical insights possible from
institutional analyses. Critics contended that
it facilitated a popular misconception of the
theory as embodying stability and inertia as
its defining characteristics. Homogeneity of
form and practice was treated as evidence of
institutional theories of organization (Kraatz
and Zajac, 1996). DiMaggio, reflecting on
‘what theory is not’ (1995) suggested that
core institutional claims in his oft-cited 1983
paper (DiMaggio and Powell, 1983) suffered
asymmetric attention:
Somewhat to my surprise, … papers … cited our
paper as support for the proposition that all organ-
izations become like all others, regardless of field.
Somehow the network argument that we authors
regarded as so central had been deleted in the
paper’s reception. Within a few more years, the
paper had turned into a kind of ritual citation,
affirming the view that, well, organizations are
kind of wacky, and (despite the presence of ‘collec-
tive rationality’ in the paper’s subtitle) people are
never rational (DiMaggio, 1995: 395).
Scholars called for efforts to ‘end the
family quarrel’ between old and new institu-
tionalism (Hirsch and Lounsbury, 1997) and
to bring agency, politics and change ‘back’
into the institutional literature (DiMaggio,
1988; Brint and Karabel, 1991; Hirsch and
Lounsbury, 1997; Perrow, 1986; DiMaggio,
1995; Greenwood and Hinings, 1996),
resurrecting it from the earlier traditions of
macro-organizational literature (i.e. Selznick,
1947). In all, these criticisms were aimed
at redressing the over-socialized view
(Granovetter, 1985), that depicted recipients
of field-level influence as a homogenous col-
lection of organizational actors, each behav-
ing according to a social script designed by
the social environment.
In response, emergent studies examined
organizational field member actions in light
of their institutional contexts (i.e. Holm,
1995; Kraatz and Zajak, 1996; Greenwood
and Hinings, 1996). This new line of reason-
ing attended to several key aspects of
field-level processes: moving beyond stabil-
ity and inertia to introduce notions of change
within the field; considering the role of
organizational self-interests and agency
within that context (Covaleski and Dirsmith,
1988; DiMaggio, 1988; Perrow, 1985) and
advancing the view that some firms can
respond strategically to institutional
pressures (Oliver, 1991) to become what
might be called institutional entrepreneurs
(DiMaggio, 1988; Fligstein, 1997; Zucker,
1988; Lawrence, 1999).
The first target for reconfiguring concep-
tions of the field addressed the notion of
change. As observers of the social world,
scholars knew that change happened even
within highly institutionalized contexts. Yet
prevailing theory did not handle such
occurrences adequately, in part because of
the way in which scholars defined and
operationalized organizational fields. Where
previous definitions of the field centered
around organizations with a common tech-
nology or market (i.e. SIC classification), the
field began to be seen as forming around
the issues that became important to the
interests and objectives of a specific collec-
tive of organizations (Hoffman, 1999).
Issues defined what the field was, drawing
linkages that may not have been previously
present.
This important clarification led to a con-
ception of the organizational field that would
bring together various field constituents with
incongruent purposes, not common technolo-
gies or industries that assured some com-
monality of interests. Rather than locales of
isomorphic dialogue, the field became con-
tested; a ‘field of struggles’ (Bourdieu and
Wacquant, 1992) where constituents engaged
in ‘a war or, if one prefers, a distribution of
the specific capital which, accumulated in the
course of previous wars, orients future strate-
gies’ (Calhoun, 1993: 86). Organizations
engage in field-level conflict, out of which
they gain skills and capital for future conflict.
 ORGANIZATIONAL FIELDS: PAST, PRESENT AND FUTURE
Thus, the organizational field became seen
as dynamic and capable of moving towards
something other than isomorphism; evolving
both through the entry or exit of particular
organizations or populations (Barnett and
Carroll, 1993; Hoffman, 1999; Scott, Reuf,
Mendel and Caronna, 2000) and through an
alteration of the interaction patterns and
power balances among them (Brint and
Karabel, 1991; Greenwood and Hinings,
1996). Others added that fields remained
conflicted even when institutional norms
were apparently ‘settled’ because powerful
actors were continually working to maintain
their legitimacy (Lounsbury and Glynn,
2001). With the field defined more in terms
of contestation and debate, institutions were
seen more as ‘the products of human design,
[and] the outcomes of purposive action by
instrumentally oriented individuals’
(DiMaggio and Powell, 1991: 8), such that
we may expect to find more opportunity for
deviance and agency among field members
(Hirsch, 1997).
Several authors developed theoretical
accounts of the sources of agency, change,
and variety within institutions and organiza-
tional fields. Oliver (1991) suggested that
organizations crafted strategic responses and
engaged in a multitude of tactics when con-
fronted with the pressures presented by the
institutional environment. She argued that an
organization’s willingness and ability to
conform to institutional pressures depended
on why these pressures were being exerted
(cause), who was exerting them (con-
stituents), what these pressures were
(content), how or by what means they were
exerted (control), and where they occurred
(context). From this perspective, all organi-
zations within a field did not march quietly
down the path towards homogeneity.
Greenwood and Hinings (1996) pushed
further to combine thoughts from both the
old and new institutionalism literatures by
developing a framework for understanding
how the internal interests and conflicts of an
organization’s members influenced the orga-
nization’s response to institutional pressures.
135
Seo and Creed (2002) highlighted an impor-
tant interest that served as an impetus for
change: field members’ need to reconcile
contradictory institutional arrangements.
According to the authors, organizational
fields were connected to and embedded
within other and conflicting institutional
systems. As field members tried to reconcile
these differences by bringing the various
institutional rules in line with their needs and
interests, the fields inevitably changed.
Most recently, Schneiberg (2007) has
suggested that change and variation comes
from within fields. If fields are indeed places
where struggle and contestation take place,
then inevitably these struggles leave behind
organizational practices and forms that suffer
defeat. These ideas may lay dormant for a
time, but field members often resurrect these
expired forms of organization and practice
which in turn, leads to increased variation
within the field.
These theoretical accounts of change were
used to develop new empirical insights.
Emergent research looked not at homogene-
ity but at variation and change among organ-
izations within a field as signs of institutional
processes. For instance, by investigating the
decline of the conglomerate organizational
form among the 500 largest American indus-
trial firms, Davis, Diekmann and Tinsley
(1994) studied the abandonment of a
well-institutionalized practice among organi-
zations within a field rather than the adoption
of such practices. Lounsbury (2001)
provided an explanation of the institutional
factors that influenced variation in the adop-
tion of two recycling practices among U.S.
colleges and universities. The study high-
lighted the internal organizational dynamics
of colleges that chose to incorporate recy-
cling duties into current waste management
policies in relation to those colleges that
chose to create a new recycling administrator
position.
This newfound emphasis on institutional
change culminated with the publication of a
special issue of the Academy of Management
Journal, with each article in this volume
136 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
seeking to interpret change and agency
within an organizational field through the
lens of institutional theory (Dacin, Goodstein
and Scott, 2002).
But, despite the insights that this new area
of research brought to bear on organizational
fields, early notions which implied that
individual organizations can respond strate-
gically to field pressures (Oliver, 1991) or
may strategically influence the process of
field change (Lawrence, 1999) treated the
organization and the field as separate and
distinct. The firm ‘responded’ to pressures by
either adapting to or resisting those
pressures. Critics argued that the interaction
between firm and field was not unidirectional
nor was it free from interpretation and filter-
ing processes. This introduced concerns for
sense-making, issue interpretation, selective
attention, and cognitive framing among field
members (Dutton and Dukerich, 1991; Scott,
1994; Hoffman and Ocasio, 2001; Hoffman
and Ventresca, 2002). The demands of the
field were not uniformly understood by all
members. Organization-level dynamics
caused field members to filter and alter envi-
ronmental demands. Further, members trans-
mitted their interests back towards the field.
The process of interaction became recursive
as the social structure of the field became
both the ‘medium and outcome of the
reproduction of practices. Structure enters
simultaneously into the constitution of social
practices, and “exists” in the generating
moments of this constitution’ (Giddens,
1979).
Scott (1994) claimed that the essence of
the field perspective was its ability to analyze
the ways in which organizations enact their
environment and are simultaneously enacted
upon by the same environment. The work of
Bansal and Penner (2002) illustrated this
process by investigating the interpretive
processes among four newspaper publishers.
The authors highlighted the importance of
regional networks in influencing the frames
and enactment processes developed to
address the recycled newsprint issue. They
found that the way in which feasibility,
importance, and organizational responsibility
for recycling were interpreted within these
networks helped account for variation in
organizational response to this issue. By link-
ing theory and argument from cognitive strat-
egy theory on issue interpretation to
institutional analysis, the authors provided an
explanation of heterogeneity in field-level
behavior.
Other work focused on the interconnected-
ness of organizations and the field by analyz-
ing the role of institutional entrepreneurs
(DiMaggio, 1988; Fligstein, 1997;
Lawrence, 1999) in shaping the discourse,
norms and the structures that guide organiza-
tional action (Maguire, Hardy and Lawrence,
2004). As in all field-level debates, certain
organizations have the ability to influence the
rules of the game (Fligstein, 1990). Yet, even
powerful actors cannot simply impose new
logics and norms on a field. At some level,
the norms must be accepted by other actors
(Beckert, 1999). The actors that lobby for the
acceptance of these new logics, norms, and
practices illustrate the work that institutional
entrepreneurs engage in to create and build
legitimacy.
Suddaby and Greenwood’s (2005) study of
the creation of multidisciplinary practices
provided insight into this process. The estab-
lishment of practices that included both
accountants and lawyers threatened the
previously agreed upon boundaries between
the accounting and legal professions. Thus,
creating a firm that included both lawyers
and accountants within the same hierarchy
required institutional entrepreneurs to
provide a legitimating account for this orga-
nizational form. To build legitimacy
entrepreneurs developed rhetorical strategies
which served two purposes. First, they
included institutional vocabularies that
articulated the logic behind new organiza-
tional practices and forms. Second, these
rhetorical strategies included language which
accounted for the pace and necessity of
change within the organizational field.
Recent discussions have taken the notion
of the institutional entrepreneur further by
 ORGANIZATIONAL FIELDS: PAST, PRESENT AND FUTURE
acknowledging that institutional entrepre-
neurs do not act alone or in isolation.
Individual agents form political networks
and coalitions to act as ‘important motors of
institution-building, deinstitutionalization,
and reinstitutionalization in organizational
fields’ (Rao, Monin and Durand, 2003: 796).
This conception provided a bridge between
institutional theory and social movement
theory (Davis, McAdam, Scott and Zald,
2005), focusing attention on the ability of
social movements to give rise to new organi-
zational fields and change the demography of
existing organization fields (Rao, Morrill and
Zald, 2000).
Social movement scholars have long rec-
ognized the connection between their work
and organizations (McCarthy and Zald, 1977;
Strang and Soule, 1998; Campbell, 2005).
McCarthy and Zald (1977) incorporated con-
cepts from organization theory to develop
their resource mobilization perspective.
According to this perspective, the availability
and accumulation of resources served as an
impetus for the formation of social movement
organizations that bear a remarkable resem-
blance to other goal-directed, hierarchical
organizations. Moreover, those social move-
ment organizations with similar preferences
for change constituted the social movement
industry, a unit of analysis not unlike the
organizational field. Organizational change
agents became parts of these collective move-
ments, using shared and accumulated
resources and power to ‘overcome historical
inertia, undermine the entrenched power
structures in the field or triumph over alterna-
tive projects of change’ (Guillen, 2006: 43).
These actions were often conducted in oppo-
sition to others in similarly configured collec-
tive movements (Zald and Useem, 1987;
Meyer and Staggenborg, 1996).
Other work sought to understand the bidi-
rectional influence of organizations and fields
built on the linkages between organizational
fields, culture, and societal institutions. In
particular, researchers sought to explain how
ideas and beliefs about organizational strate-
gies and practice became standard and spread
137
in highly-structured fields of activity
(Edelman, 1990; Guthrie and Roth, 1999;
Washington and Ventresca, 2001). For exam-
ple, Zilber’s (2006) study highlighted the
ways in which Israeli society, culture, and
fields are intertwined. High technology was
mythologized as a tool, enabling the creation
of useful products, an area where gifted indi-
viduals excelled, and as a vehicle for national
development and societal progress within the
Israeli popular press. Each of these myths was
found at the level of the organizational field
as high technology companies incorporated
elements of these myths in the job descrip-
tions contained within employment advertise-
ments. As a result, rationalizations of the
benefits and purposes of high technology to
Israeli society were incorporated within the
employment activities of the high technology
organizational field.
In sum, the critiques of new institutional
theory led to streams of field-level research
that focused on change, variation, and
agency discussed above. But, while the past
and present of organizational research dif-
fered from one another in terms of the out-
come studied, they were connected by their
conceptualization of fields as ‘things’ that
produced outcomes. More recent critiques
have suggested that the future of field
research lies not in the further emphasis on
outcomes but instead in conceptualizing
fields as mechanisms (Hoffman and
Ventresca, 2002; Davis and Marquis, 2005).
This refocus allows for the specification of
collective rationality and the possibility that
fields serve as mechanisms for bringing
about phenomena other than similarity
(DiMaggio and Powell, 1983; Washington
and Ventresca, 2001). We address these
themes in the third section of this chapter.
ORGANIZATIONAL FIELDS:
THE FUTURE
In the final portion of this paper, we offer our
thoughts on the future of organizational field
138 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
research. We develop our arguments regard-
ing future directions based on the critiques of
past and present research as focusing on the
outcomes of field membership as opposed to
the processes that hold the members of a
field together. We encourage those involved
in organizational field research to focus on
collective rationality within fields: how it is
developed, which field members contribute
to its development and maintenance, how it
is transmitted to other actors, and how it
changes over time.
Scott (2001) defined the field as a commu-
nity of organizations that partake in a
common meaning system and whose partici-
pants interact more frequently and fatefully
with one another than with actors outside the
field. DiMaggio and Powell (1983) defined
the field as those organizations that in the
aggregate represent a recognized area of
institutional life. While both of these defini-
tions treat the field as a collective of organi-
zations, they also present an underlying
notion that represents a future conception of
the field; one where the field is a locale in
which organizations relate to or involve
themselves with one another. A definition
that in some ways brings us back to the
influence of Bourdieu – where a field is as
much about the relationship between the
actors as it is about the effect of the field on
the actors.
To move away from the current focus on
field outcomes and towards an understand-
ing of why field-level interactions remain
vital to organizations, fields must be seen,
not as containers for the community of
organizations, but instead as relational
spaces that provide an organization with the
opportunity to involve itself with other
actors (Wooten, 2006). Fields are richly
contextualized spaces where disparate
organizations involve themselves with one
another in an effort to develop collective
understandings regarding matters that are
consequential for organizational and field-
level activities.
Moving beyond the notion of fields as
being constructed around the physical
proximity of actors (Warren, 1967) or
issues (Hoffman, 1999), fields as relational
spaces stresses the notion that organizations
become connected within the same field
when they begin to take note of one
another. This does not mean that actors
formalize their relations via hierarchical
arrangements or network ties (Djelic and
Sahlin-Andersson, 2006). Instead, one actor
takes note of another and through this
process of referencing one another, actors
bring a field into existence. Out of a rela-
tional notion of the field emerge several
critical issues concerning formation, evolu-
tion, and boundaries.
● Why does one relational space with this set of
actors form and not another? Why do disparate
organizations and populations come together at
the field level? How and why do fields form?
What processes drive some organizations to
interact more frequently and fatefully with one
another than with other organizations, thus
creating the boundaries of a field?
Research must highlight the organizational
dynamics that lead actors to engage one
another and start the field-level structuring or
restructuring process. It is not evident, for
example, why petrochemical companies
would willingly engage environmental
groups without understanding the dynamics
of field-level engagement in field studies
(i.e. Hoffman, 1999). Future research should
investigate the dynamics that lead to field
creation and the contextual factors that lead
to one field form over another. For example,
relations that form around a common tech-
nology, say coal production, are not likely to
be similar to those relations that form around
an issue such as environmental protection.
Such differences will undoubtedly influence
the character of the field (Stinchcombe,
1965) and the specification of collective
rationality.
Entrance to or engagement within the field
is often precipitated by disruptive events
such as exogenous shocks that provide the
impetus for organizations to make sense of a
reconfigured environment. Disruptive events,
 ORGANIZATIONAL FIELDS: PAST, PRESENT AND FUTURE
such as the threat of a hostile takeover
(Davis, 1991), regulatory changes (Edelman,
1992), environmental catastrophes (Hoffman
and Ocasio, 2001) or rituals (Anand and
Watson, 2004) create contradictions within
the environment (Seo and Creed, 2002) and
force organizations to (re)analyze their sur-
roundings. Fields serve as the sites in which
organizations come together to do this sense-
making work. Future research will address
what drives organizations to interact with one
another and how those configurations are
formed. It will also hold open the possibility
that the field is not always in use. Instead, the
field comes alive when organizations decide
to interact with one another and this is the
moment that researchers are encouraged to
direct their attention towards as it provides
tentative answers to the questions now being
posed.
● Once formed, how do fields evolve and change?
What are the dynamics by which engagement
takes place?
The essence of a field is its ability to serve as
the meeting place where organizations have
the opportunity to involve themselves with
one another. Positioning fields in this
manner brings scholarship back to the core
concepts of the literature, refocusing on the
development of ‘collective rationality’
(Scott, 2001), rather than the impact that col-
lective rationality has on the field. But that
field structure is not static. It evolves in
makeup, interconnections and conceptual
frames.
For example, Anand and Watson’s (2004)
study of the Grammy Awards illuminates this
emerging conception of the organizational
field. In addition to providing the music
industry’s members with an opportunity to
meet annually and celebrate one another’s
accomplishments, the music industry as a
field is engaged at this event. Artists fight for
the creation of categories particular to their
genre to legitimate their status as field mem-
bers. The addition of new genres to the music
industry causes the boundaries of the field to
139
become contested. Thus, the Grammy
Awards represent the site where conflicts
among members are engaged and resolved.
The petition for new categories represents a
disruptive event and the current members
engaging with the relational space of the
field (i.e. the Grammy Awards) develop a
new collective rationality about which artists
belong within the field and which do not.
An actor’s attempt to gain membership
strains the existing order within an estab-
lished field. Field members that once had
limited interactions with one another may
band together because of a common interest
in locking a particular actor out of the field,
thus changing the pre-existing coalitions.
Under such circumstances, every aspect of a
field’s character is challenged. As new actors
push for admittance, the interorganizational
structures and coalitions that once supported
the field no longer make sense and the
mutual awareness among the field members
that they are involved in a common enter-
prise must be revisited.
This leads to an appreciation for con-
tending logics as a force for institutional
change (Seo and Creed, 2002; Suddaby and
Greenwood, 2005). Reay and Hinings
(2005), for example, develop a theoretical
model to explain change in mature organi-
zational fields by emphasizing the role of
competing institutional logics as part of a
radical change process. Rather than
explaining the sources of change, they
investigate how a field becomes re-estab-
lished after the implementation of a radical
structural change. Studying fields at these
moments of restructuring increases our
understanding of how collective rationality
is developed.
● How can the activities within field-level popula-
tions be identified and defined? How do field
members relate to one another?
While field constituents’ actions may be
initially conducted in opposition to one
another (Zald and Useem, 1987; Meyer and
Staggenborg, 1996; Davis, McAdam, Scott
140 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and Zald, 2005), protracted institutional
engagement can yield a gradual merging of
interests with a concurrent alteration in the
structure of the field itself. However, until
that happens, the field is not a collective of
isomorphic actors, but an intertwined
constellation of actors who hold differing
perspectives and competing logics with
regard to their individual and collective
purpose (McCarthy and Zald, 1977). As
such, an appreciation for the diversity of
activities and beliefs must be incorporated
into field-level arguments, directing atten-
tion towards the development of a terminol-
ogy for the differing roles that field
members play.
Every social group has roles that members
must adopt to perpetuate the group’s exis-
tence. Moreover, these roles typically confer
different responsibilities for the actors
within them. For instance, the role of
‘mother’ has a different set of behavioral
expectations than the role of ‘brother.’
Within field research, we have been neglect-
ful of the differing roles that field members
have. The exceptions may be our focus on
entrepreneurs or change agents. Yet, even in
this case, we label a member as an entrepre-
neur or not, a change agent or conversely a
protector of the status-quo. Conceptualizing
the field as a relational space dictates that we
take a closer look at the way in which actors
relate to one another, especially the roles
that certain members adopt to advance the
field.
Lawrence and Suddaby’s (2005) review of
institutional theory provides a typology of
the different types of activities that actors
engage in to create, maintain, and disrupt
institutions. For example, during the cre-
ation stage actors advocate on behalf of an
institution by mobilizing political and regu-
latory support. During the maintenance
stage, advocacy becomes less important and
actors instead aim to police the activities of
others to ensure the institution’s continua-
tion. This suggests that at the level of the
organizational field, different actors engage
in various tasks. For example, during the
creation stage of the field, it is highly
unlikely that all members of an organiza-
tional field would need to advocate on the
field’s behalf. A more feasible scenario
would involve a select number of field mem-
bers devoting their time and energy towards
this task while other field members focus
their attention on other activities also vital to
the field’s emergence. With greater focus on
the different types of work that actors
perform comes a need for a language to
articulate these distinct institutional roles.
Labels for each member of the community
of organizations become necessary accord-
ing to the type of institutional activities per-
formed. General terminology like buyer,
supplier, or regulatory agency will no longer
provide a sufficient explanation of the role
organizations adopt or the work they
perform within the field.
Labeling organizations in this manner
will provide deeper clarity on the collective
understanding held by each field member
regarding which actors perform what roles
within the field. Just as organizational
members can reduce uncertainty over work
roles by developing agreement about the
responsibilities that come with organiza-
tional roles, field members can also reduce
the level of uncertainty they face by devel-
oping a corresponding understanding of
what type of work each field member is
responsible for given their role within the
field.
Though we strongly encourage scholars to
move away from the focus on outcomes
within field research, we recognize that it
may be difficult to wean ourselves off of this
line of inquiry. Therefore, we highlight
several avenues of research based on the
relational space perspective on fields.
● Beyond discerning appropriate behavior, what do
the disparate organizations hope to gain from
their involvement with one another?
As we move beyond the depiction of
organizations as mere recipients of institu-
tional pressures, it is also time to advance
 ORGANIZATIONAL FIELDS: PAST, PRESENT AND FUTURE
conceptions of what organizations take
away from field membership. If we take the
field as a relational space, we can envision
other uses for the field beyond discerning
appropriate behavior. Field-level interac-
tions are best understood as mechanisms by
which other organizational phenomena
occur. For example, some have begun to
investigate the field-level processes by
which organizational identities are formed.
Within the organizational literature, identity
is typically presented as an organizational-
level property developed internally by the
members of an organization. While research
has suggested that organizational identity is
influenced by outside parties (Dutton and
Dukerich, 1991; Elsbach and Kramer,
1996), the general consensus holds that an
organization’s identity is what members see
as central, distinctive, and enduring about
the organization (Albert and Whetten,
1985). Wedlin (2006) challenges this con-
ception of organizational identity formation
by positioning the organizational field
as the site in which organizations develop
their identity. In this view, identity forma-
tion is seen as an inherently social and
interorganizational process and the field is
the place in which organizations take on this
task.
Other work has sought to understand
how field membership influences phenom-
ena such as hiring (Williamson and Cable,
2003) and collaborative tie formation
(Kenis and Knoke, 2002), both processes that
had been thought to be reflective of
dynamics internal to the organization. This is
not to suggest that scholars recast every
organizational process as being dependent
upon field-level membership, as this
would push the literature towards an over-
socialized view once again. However, it
does suggest that envisioning organizational
fields as influential to the development of
intra-organizational processes exposes a
host of possibilities for research projects that
shed light on the institutional factors
that influence an organization’s daily
functioning.
141
● How is field-level interaction affected by mecha-
nisms and structures internal to the individual
organization, and how does this interaction
change those mechanisms and structures?
Future organizational field research will
focus on the processes of participating in a
field and what this participation ultimately
means for the inner workings of an organiza-
tion (Hoffman, 2001). To date, field research
has largely provided an explanation of
macro to macro transitions; field-level inter-
actions lead to changes in structure, culture,
and output at the aggregate field levels.
Moving forward, field research will serve as
a bridge between the macro and micro by
providing detailed explanations of how
field-level interactions influence internal
organizational phenomena. This direction
acknowledges that the field is made up of
various actors that constitute a community
of organizations (DiMaggio and Powell,
1983; Scott, 1995, 2001) while simultane-
ously acknowledging that organizational and
field-level factors are interconnected in a
reciprocal relationship.
Future research will continue to bridge
the old and new institutionalisms in an
effort to understand how field membership
aids other intra-organizational processes. As
discussed earlier, prior attempts to connect
these literatures imported the concepts of
agency and interests from the old-institu-
tionalism to explain how organizational
field members resisted isomorphic pres-
sures. While this represents progress on one
front, problems still remain with the way in
which agency and interests are conceptual-
ized in the institutional domain. Currently,
both the old and new institutionalisms pres-
ent the concepts of agency and interests in
an atomistic fashion. Each holds that an
organization’s self-interests are developed
internally and cause the organization to
undertake some action such as cooptation or
resistance (Oliver, 1991). Yet, Scott (1991)
insisted that institutions define the ends and
shape the means by which interests are
determined and pursued. The formation and
142 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
pursuit of interests must be seen as the prod-
uct of field-level engagement. Just as
research has recast organizational identity
formation as a field-level process, so too
will research reconceptualize organizational
agency and self-interests by focusing on the
possibility that field-level engagement
enables an individual organization’s pursuit
of self-interests. This will redirect more
attention to the way in which the field pro-
vides an organization with a context to enact
agency.
● How do institutions spread or diffuse within field-
level populations?
Just as institutional scholars (particularly
within North America) emphasized mimetic
or taken-for-granted forces as the primary
mechanism by which organizational field
members became homogeneous to one
another (Mizruchi and Fein, 1999), we have
also emphasized the diffusion model as an
explanation for how institutional rules are
adopted and spread throughout an organiza-
tional field. Theoretical and empirical works
in the institutional literature imply that orga-
nizational practices spread through fields like
wild-fires, with members succumbing to
pressures to adopt these practices. Moreover,
field members adopt these practices intact
without adjusting or manipulating them to fit
their specific needs or context. Yet, more
recent research suggests that the uncritical
adoption of practices encouraged by the dif-
fusion process accounts for the failure of
these practices to deliver the promised benefit
to organizational functioning (Kitchener,
2002).
As we begin to view the field as a highly
interactive relational space, relying so heavily
upon the diffusion model will no longer suf-
fice. Work within the European tradition pro-
vides an alternative understanding of how
institutional norms and rules take hold at the
field level. Instead of diffusing through a field,
organizational practices are translated from
the institutional level to the organizational
level (Czarniawska and Joerges, 1996; Zilber,
2006). In the process of translation, the
original meaning of an organizational practice
changes as individual field members incorpo-
rate these items into their own organization.
Much like literal translations from one lan-
guage to another often have no meaning,
incorporating a prevailing practice ‘as-is’ into
an organization may not yield the intended
consequences. Instead, field members must
determine how to bend and shape a prevailing
organizational practice such that it will hold
meaning for their own organization and the
field facilitates this translation process. As
organizations relate to one another within the
field, they can determine how other members
incorporated the predominant practices and
use this knowledge to determine how best to
mold these practices for use within their own
organization.
Another byproduct of the emphasis on the
diffusion model has been that theoretical and
empirical work using this model leaves the
impression that the widespread adoption
of a practice within an organizational field
equals institutionalization. Zeitz, Mittal and
McAulay (1999) caution us to reconsider.
The authors suggest that, just as organiza-
tions adopt a practice en masse, they may
also abandon the practice with the same
vigor in a short amount of time. Instead of
focusing on the presence of a practice at a
finite moment in time, the authors implore
researchers to focus on the micro-processes
that allow a practice to take hold and become
‘entrenched’ within an organizational field
(Zeitz et al., 1999). Future research will draw
attention to the relational dynamics which
facilitate not only the widespread adoption
of certain practices over others, but also
provide greater understanding of the intra-
organizational processes (i.e. identity, inter-
ests, agency) that facilitate the entrenchment
of certain practices over others.
CONCLUSION
This chapter offers views on how the
central concept of institutional theory – the
 ORGANIZATIONAL FIELDS: PAST, PRESENT AND FUTURE
organizational field – has changed over the
past three decades. It presents a trajectory
that began by focusing on the dynamics that
led to conformity in behavior among organi-
zations and evolved towards understanding
the dynamics that allow for heterogeneity,
variation, and change. The chapter ends with
thoughts on where the future of organiza-
tional field research lies, suggesting that
scholars orient their research towards the
processes that encourage field formation and
collective rationality. The future of organiza-
tional field research is linked to the future of
organization theory in general.
In speculating about the prospects for
organization theory in the twenty-first cen-
tury, Davis and Marquis (2005) suggest that
research in this area has moved away from
being paradigm driven to being problem
driven. As such, field-level research is ready
to make the transition from testing the core
ideas of the new institutional theory para-
digm to investigating fields as sites where
problems of organizing are debated among
disparate actors. The domain of organiza-
tional fields is now ready to move away from
the simple outcomes of institutional
processes, to instead explain why the field
remains integral to understanding how organ-
izations construct solutions to the problems
of the twenty-first century. This moves
beyond notions of institutions as barriers, as
always taken-for-granted and as leading
towards isomorphism and, instead, refocuses
on field-level dynamics, collective rationality
within these fields and the behavior of indi-
vidual organizations as integral parts of these
processes. Researchers will return to a focus
on the structuration processes with a particu-
lar interest in understanding how the struc-
turing of fields contributes to intra- and
interorganizational processes. While not a
complete agenda for future research, this
represents a starting point for researchers
wishing to understand the processes that
lead organizations to relate to one another
and to ultimately do so within the space we
have come to know as an organizational
field.
143
ACKNOWLEDGMENTS
We would like to thank John Campbell, Marie-Laure
Djelic, and the editors for helpful comments on pre-
vious drafts. The first author would like to thank
Dartmouth College's Sociology Department and
Policy program for their support during the writing of
this chapter.
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 SECTION II

Institutional Dynamics

The Work of Meanings in
Institutional Processes and
Thinking
The interest in the role of meanings in institu-
tional theory is both old and new. While mean-
ings were at the heart of early neo-institutional
thinking (e.g. Meyer & Rowan, 1977; Zucker,
1977; DiMaggio & Powell, 1983), and while
they constitute much of its unique contribution
vis-á-vis other open-system theories (Scott,
2007), the very exploration of meaning was
somewhat neglected later on, especially in the
empirical inquiry of institutions. Thus, our
understanding of the work of meaning in insti-
tutional processes had been limited (Dobbin,
1994a; Friedland & Alford, 1991; Hasselbladh
& Kallinilos, 2000).
Lately, however, we have seen a renewed
empirical and theoretical interest in the
ideational aspects of institutional processes.
What do these studies tell us about institu-
tional processes that we have not known
before based on studies that focus on the
more tangible – structural and practical –
aspects of institutions? Answering this ques-
tion will be my main concern in this chapter.
Based on a review of empirical studies and
5
Tammar B. Zilber
conceptual formulations, I will argue that
studies that examine the dynamics of mean-
ings in institutionalization reinterpret the
social constructionist approach from which
institutional theory had originated, and offer
a unique perspective that complements the
mainstream studies. Specifically, the focus
on meanings highlights the particular, con-
textual, the political, and the on-going
processes involved in institutionalization.
My aim is twofold: Offering a reading of
institutional processes as depicted by studies
that deal with meanings; and, on another
level of analysis, point to the institutionaliza-
tion of the study of meanings within our dis-
cipline. I start with a short exposition of what
I mean by ‘meaning’ and the procedure I fol-
lowed in gathering those works which consti-
tute the data set for this review. I will then
offer a reading of this collection of empirical
and theoretical works, mainly by analyzing
the notion of institutional processes they
offer. Finally, I will discuss a few directions
for further research.
152 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
THE MEANING OF ‘MEANING’
While the role of meanings was central to
early theoretical formulations of neo-institu-
tional thinking, to date we do not have an
agreed upon terminology for ‘meaning.’
Following Meyer and Rowan’s (1977)
‘rational myths’ – the shared meanings and
understandings associated with social struc-
tures – other related concepts abound in the
literature, including ‘analogies’ (Davis,
Diekmann & Tinsley, 1994), ‘discourse’
(Phillips, Lawrence & Hardy, 2004), ‘legiti-
mating accounts’ (Creed, Scully & Austin,
2002), ‘linguistic framing’ (Hirsch, 1986),
‘management rhetoric’ or ‘rationales’
(Kelly & Dobbin, 1998), ‘rationalities’ or
‘institutional myths’ (Townley, 2002), and
‘theorizing’ (Greenwood, Suddaby &
Hinings, 2002; Strang & Meyer, 1993).
Given this polyphony of terms (apparently
with some nuanced yet important differences
between them), I chose to craft this review
using a bottom-up approach. Rather than
offer a clear-cut definition of ‘meaning’ and
point to its implications to institutional
theory, I follow the way meanings were dealt
with by researchers in the field of institu-
tional theory – publishing and presenting
their work within the community of institu-
tional scholars. Through a content analysis of
published works that deal with ‘meaning’
and institutionalization, I came to (one possi-
ble) understanding of what institutional
scholars consider as ‘meaning’ and its role in
institutional processes.
But, obviously, there is no logical way of
totally avoiding some initial definition that
directs what is to be included in the review.
Hence, to begin with, meaning is defined as
‘what is intended to be, or actually is,
expressed or indicated’ (Random House
Webster’s 1998: 1191), and in our context,
meaning is what is signified in institutional
structures and practices. I try to analytically
concentrate on ‘meanings’ as a separate
object of inquiry. ‘Meaning’ refers then to
that which is not structure or practice per-se –
that is to the untangible. Accordingly, I use
the term ‘meaning’ to denote those aspects of
institutions that are ideational and symbolic,
to distinguish them from the material aspects
of institutions. Of course, meaning and the
material are intertwined, constituting each
other. Meanings are encoded in structures
and practices, while structures and practices
express and affect those meanings. And still,
for analytical purposes, it is worthwhile to
focus our attention on meaning alone, and
take stock of our understanding of its dynam-
ics, and implications, for institutional
processes and theory.
I collected empirical studies and theoreti-
cal formulations that explicitly deal with
meanings in institutional processes. Many, if
not most, publications in the area of institu-
tional theory pay respect to meaning, as part
of the institutional explanatory model, with-
out directly measuring it or dealing with its
dynamics (Mohr, 1998: 347). I looked
instead for papers that treat ‘meanings’ –
broadly defined – as their main concern.
These include theoretical conceptualizations
that deal with the role of meanings in institu-
tional processes, as well as empirical investi-
gations that explore meanings and their
dynamics. I started my search with a central
database of journals, the ‘Web of
Knowledge’, using the key word ‘institu-
tion*’ and looking for papers that were
published in the various outlets included in
this database in the field of organizational
theory (e.g. Academy of Management
Journal, Academy of Management Review,
Administrative Science Quarterly, Organi-
zation Studies, Organization Science, Human
Relations, Journal of Management, Journal
of Management Inquiry, Journal of
Management Studies) as well as in sociology
(American Journal of Sociology, American
Sociological Review). Next, since works that
deal with meanings are somewhat peripheral
in our field (using qualitative research
methods,1 and often carried out by European
scholars), I tried to be more inclusive by fol-
lowing the bibliographies of journal articles,
trying thus to tracing also relevant books and
book chapters in a snowball manner.
 THE WORK OF MEANINGS IN INSTITUTIONAL PROCESSES AND THINKING
Once the data set was compiled, I used the
tools of my trade to analyze it. I conducted
a content analysis of these works (Lieblich,
1998), looking for the more specific ways
they define and use ‘meaning’, and the way
they portray its role in institutional pro-
cesses. After reading each paper, noting its
theoretical question, methodological approach,
findings and contributions, I asked myself
what depiction of institutionalization the
paper offers. I then analyzed the collection of
papers, looking for similarities between these
depictions. As I was interested in what is
unique about meanings in institutional
processes, I chose to frame my review vis-
á-vis studies of the structural and practical.
Thus, I will highlight those aspects that are
common to the different approaches towards
meaning, rather than exploring detailed
nuances within them.
EARLY BEGINNINGS
The emphasis on meaning was at the heart of
neo-institutional thinking in its very early
formulations in the 1970s. We find much ref-
erence to shared meanings, culture and
myths in the work of various early theoreti-
cians of neo-institutionalization. To begin
with, institutions were understood as social
constructions (Berger & Luckmann, 1966),
that is, structures, practices and meaning sys-
tems that come to be taken for granted
through their repeated social enactment –
which involves, first and foremost, language
and other symbolic expressions and artifacts.
More specifically, Meyer and Rowan termed
the notion of ‘institutionalized myths’, relat-
ing to ‘rationalized and impersonal prescrip-
tions that identify various social purposes as
technical ones and specify in a rule-like way
the appropriate means to pursue these techni-
cal purposes rationally … [These myths are]
beyond the discretion of any individual par-
ticipant or organization … [they are] taken
for granted as legitimate, apart from evalua-
tions of their impact’ (1977: 343–344). In
153
sharp contrast to functionalist theories of
organizational structure, Meyer and Rowan
(1977) claimed that organizations are ‘dra-
matic enactments of the rationalized myths
pervading modern societies’ (346). The main
idea was that while the adoption of
institutionalized elements may not ensure the
effective operation of an organization, it will
confer legitimacy upon it, and this legitimacy
is critical to its survival: ‘vocabularies of
structure which are isomorphic with institu-
tional rules provide prudent, rational, and
legitimate accounts. Organizations described
in legitimated vocabularies are assumed to be
oriented to collectively defined, and often
collectively mandated, ends’ (349).
Zucker, in her study of cultural persistence
(1977), highlighted the specific role of mean-
ing in institutionalization. Treating institution-
alization as a dependent variable and looking
for independent variables to explain it, she
claimed that it is the meaning of an act – the
degree to which it is ‘perceived to be more or
less exterior and objective’ (728) – that deter-
mines the degree of its institutionalization.
Moreover, she also studied the effect of
institutionalization on the transmission,
maintenance and resistance of cultural
understandings.
In their quest to define the isomorphic
forces at play in institutionalization,
DiMaggio and Powell (1983) followed suit
with an emphasis on the central role of
ideational elements in structuring organiza-
tions (and organizational fields). Each of the
isomorphic pressures (the coercive, mimetic
and normative) can thus be extracted from,
and in any case is built upon, cultural expec-
tations, shared cognitions and beliefs. The
isomorphic forces were described then as
‘great rationalizing’ forces in action.
And finally, in his ‘omnibus’ conceptual-
ization of institutions, Scott (most lately
2007) argued that institutions have regula-
tive, normative and cultural-cognitive ele-
ments. The latter ‘involves the creation of
shared conceptions that constitute the nature
of social reality and the frames through
which meaning is made’ (Scott, 2003: 880).
154 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
The cultural-cognitive pillar directs attention
to the taken for granted meanings that under-
lie the institutional order. The theoretical
emphasis on meaning is further reflected in
Scott’s (2007) conceptualization of ‘institu-
tional carriers’ in which he distinguishes
between four types – artifacts (material cul-
ture), routines (habitualized behavior), rela-
tional systems (personal and organizational
networks) and symbolic systems. Institutions
are carried through ‘various types of
symbolic schemata into which meaningful
information is coded and conveyed’ (Scott,
2003: 882).
Meaning, then, had a central place in the
development of early neo-institutional think-
ing. In fact, it is the attention to meanings,
culture and symbols – the non-technical
environment, as it was termed – that is con-
sidered to distinguish the neo-institutional
school from its ‘old’ predecessor, as well as
from other open system theories in our disci-
pline (Scott, 2007). Notwithstanding this the-
oretical emphasis on meaning, most
empirical studies of institutionalization in the
past 30 years focused on structures and
practices, relegating meaning to the back-
ground (Farashahi, Hafsi & Molz, 2005;
Hasselbladh & Kallinikos, 2000; Glynn
& Abzug, 2002; Jepperson, 1991; Zilber,
2002).
Three main explanations to this state of
affairs come to mind, and they can all be con-
ceptualized in neo-institutional terms. The
first has to do with the taken-for-granted
assumption about the social carrier of institu-
tions, the second is the outcome of a taken-
for-granted epistemological assumption, and
the third is related to the taken-for-granted
method for exploring institutions. Thus,
Meyer (1996: 241–242) ascribes this ten-
dency to the ‘typical American version’ of
institutional theory, which assumes the
‘rational actor’: ‘These actors have prior pur-
poses, clear boundaries, definite technolo-
gies, unified sovereignty, clear internal
control systems, and definite and discrete
resources to employ. This starting point
makes it difficult to think about institutional
processes as involving the travel of ideas.’
Rational actors are in full control over their
actions, motivated by goals that they pursue
through the use of technologies and the
resources at their disposal. Meanings and
symbolism, depicted as potentially having
power of their own, have no place in this pic-
ture. Second, since neo-institutionalists hold
that ‘institutional beliefs, rules and roles
come to be coded into the structure’ of organ-
izations (Scott, 1987: 506), in most institu-
tional studies, the very institutionalization of
a structure or practice is taken to testify that
it won legitimacy, without probing into the
meanings and cultural processes involved.
Researchers studied structural and practical
dimensions of institutions, assuming – rather
than directly studying – their symbolic,
meaningful character. Third, methodological
preferences may be responsible as well
(Bowring, 2000; Schneiberg & Clemens,
forthcoming). Again, in the lingo of institu-
tional theory itself, longitudinal, quantitative
studies are the taken-for-granted procedure
in our discipline. They serve as a social
resource that wins legitimacy, whereas quali-
tative studies do not fit within ‘the way
things are done.’ Meanings elude quantifica-
tion, do not allow for causal inferences and
explanations in the form of correlations
between clear causes and effects. Instead,
meanings call for ‘after the fact’ interpreta-
tions, and for case studies with thick
accounts rather than broad generalizations –
all of which do not fit nicely with the posi-
tivistic paradigm current in our discipline.
TAKING STOCK
Recently, however, we see a renewed empir-
ical and theoretical interest in meanings in
institutionalization. The linguistic turn in
organization studies (Alvesson & Karreman,
2000), and the growing acceptance of quali-
tative research methods (Van Maanen, 1998)
and of critical approaches (Alvesson &
Deetz, 1996) within our discipline, all partly
 THE WORK OF MEANINGS IN INSTITUTIONAL PROCESSES AND THINKING
as a result of the influence of European-
based scholars (Usdiken & Pasadeos, 1995)
contributed to this change. Taken together,
this body of works highlights four
dimensions of the institutional order – being
particular, contextual, conflictual and ever
dynamic. These attributes are of course
interconnected, but for the sake of analytical
clarity I will differentiate between them in
the following discussion, and exemplify each
separately.
The particularities of
institutionalization
Recent studies have emphasized the ways in
which institutionalization occurs in relation
to the specific content of the meaning
systems involved. Rather than depicting
institutionalization as governed by universal
laws, studies of meaning highlight the partic-
ularities of the process, and the importance
of specific meanings in explaining the micro-
processes of (de)institutionalization, both on
the organizational (Prasad & Prasad, 1994;
Ritti & Silver, 1986; Wicks, 2001; Zilber,
2002) and field levels (e.g. Clark & Jennings,
1997; DiMaggio & Mullen, 2000; Ferguson,
1998; Hargadon & Douglas, 2001; Quaid,
1993; Rao, Monin & Durand, 2003; Scheid-
Cook, 1992; Townley, 2002).
For example, Wicks’ (2001) study of a
mine explosion highlights the crucial role of
the institutionalization of what he calls the
‘mindset of invulnerability’ that, among
other factors, allowed the accident to happen.
Based on textual analysis of secondary data,
Wicks shows specifically the crucial role of
meanings – embodied in the masculine
identity of coal miners and the embrace of
risk as part of their job – in overlooking dan-
gers and acting in ways that raised the risks.
Rao, Monin & Durand (2003), in their study
of the rise of the Nouvelle Cuisine in French
gastronomy, highlight the role of meanings
as embodied in identity at the field level as
well. They show that the meanings ascribed
to the role of chefs and the various practices
155
they employ were central to the diffusion of
a new institutional logic within the field.
Townley (2002) offers a rare inquiry into the
various meanings of institutionalized myths
and their effect on the process of institution-
alization. Based on interviews and archival
data, Townley shows how the introduction of
a new practice of business planning and per-
formance evaluation to a division of the
provincial government in Alberta, Canada,
was affected by the meanings relevant actors
saw in them. Using Weber’s typology of four
types of rationality as an interpretative
schema, she follows the ways her informants
made sense of the changes, and how these
different understandings shaped their
reactions thereof.
Indeed, once the particularities of institu-
tionalization are explored, it was found that
the seemingly ‘same’ institutional practices
and structures may be infused with different
meanings by different actors, and hence have
differential institutional effects. Zilber
(2002), in her study of a rape crisis center
that evolved under the dual, sometimes com-
peting, institutional pressures of a feminist
ideology and a therapeutic worldview,
showed how the very same institutionalized
practices were understood differentially by
different members. Practices which origi-
nated from a feminist ideology and were
understood as such by members who carried
the feminist institution, were reinterpreted by
therapeutically oriented members as
reflecting a therapeutic rationale. Based on
this ethnographic study, Zilber claims that
the difference in interpretation – the work of
meaning – allowed for the co-existence of the
two quite different institutions in one organi-
zation. At the field level as well, DiMaggio &
Mullen (2000) showed how the very ‘same’
practice – the ritual of ‘music week’ – was
celebrated differentially in different commu-
nities across the USA. DiMaggio & Mullen
(2000) connected the various construction of
the ‘music week’ as a civic ritual to various
characteristics of the local adopting
communities. These studies show, then,
that to fully understand the dynamics of
156 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
institutionalization, one must attend not only
to institutionalized structures and practices,
but to their (specific) meanings as well.
Institutionalization in context
Current studies of meaning in institutional
processes underscore the contextuality of
institutions. They attest to the complex
connections and interactions occurring
between the institutionalized and the
meaningful environment within which it is
embedded. Thus they argue that institutional-
ization occurs in relation to the ways
meanings are contextualized within systems
of meanings at the field and societal levels
(e.g. Holm, 1995; Lawrence & Phillips,
2004; Zilber, 2006a; Zilber, 2006b). For
example, in her study of Israeli hi-tech indus-
try, Zilber (2006a) followed the imagery of
Israeli hi-tech in two social arenas (the
societal versus the field level), and through
time (the boom and bust of the hi-tech indus-
try world-wide). Based on the analysis of
newspaper articles and want-ads, Zilber
connects the prevalent rational myths of
Israeli hi-tech to generic rational myths in
Israeli society more generally, showing how
the same cultural building blocks were used
differentially in different institutional arenas
and in different points of time to construct
the meaning of hi-tech and its importance.
Zilber claims that this process of translation
of generic into specific rational-myths in the
process of institutionalization is related to
material fluctuations over time and to the
dynamics of the different institutional arenas.
Lawrence and Phillips’ (2004) study of the
emergence of commercial whale-watching in
Canada exemplifies the importance of
reference of actors to the meaningful socio-
cultural environment for the emergence of a
new institutional field. They show how
changes in what they call ‘macro-cultural
discourse’ concerning the nature of whales
created the very opportunity for commercial
whale-watching. Based on the analysis of
various texts, they followed the regulatory,
anti-whaling and popular culture discourses,
and charted the changes in the discursive
construction of whales and human–whale
interaction. The change in this case is dra-
matic, from the negative to the positive,
which they term the change from Moby Dick
to Free Willy. While 150 years ago whales
were depicted as dangerous animals, these
days they are perceived as endearing crea-
tures to be respected and enjoyed. If not for
this depiction, whale-watching could not
have developed as a commercial field.
However, this change in the macro-cultural
depiction of whales, apparent in North
America in general, dramatic as it was, was
only a precondition for the emergence of the
field of commercial whale-watching. For a
new institutional field to emerge, entrepre-
neurial action was needed. This entrepre-
neurial activity included the local use and
manipulation of macro-cultural discourses.
For example, when the field of commercial
whale-watching grew, it encountered the
critic that the many boats surrounding the
whale’s habitats were ‘harassing’ the whales.
Whale-watchers reacted by building on the
humanization and anthropomorphization of
the whales, apparent in the popular and in the
anti-whaling discourses. They thus argued
that the whales were ‘urban whales’, that is
that they had already habitualized to the
presence of humans, so that the heightened
commercial activity did not harass them.
This study shows the embeddedness of an
emerging institutional field, and of entrepre-
neurial activity, within various meaningful
contexts. If we were to study the institution-
alization of whale-watching in Canada by
following only the structural and practical
dynamics, we would have missed the impor-
tant role played by meanings at both the
broad cultural and local levels.
That institutions are sensitive to their
meaningful context is especially apparent in
comparative studies that follow the travel of
institutional structures and practices across
national borders (e.g. Boxenbaum, 2006;
Frenkel, 2005; Mazza, Sahlin-Andersson &
Pedersen, 2005; Meyer & Hammerschmid,
 THE WORK OF MEANINGS IN INSTITUTIONAL PROCESSES AND THINKING
2006; Saka, 2004). For example, Meyer and
Hammerschmid (2006) studied the transla-
tion of market managerialism in the Austrian
public sector. Based on managers’ answers to
open questions in a survey, the authors ana-
lyzed their social identities as reflections of
institutional logics. They found that Austrian
executives used both old administrative logic
and new market managerialist logic in
constructing their social identities, thus re-
defining and translating the seemingly global
logic of market managerialism into the local
context. In the same vein, based on an
ethnographic study of the translation of the
American practice of diversity management
in Denmark, Boxenbaum (2006) highlighted
the importance of the strategic framing of the
practice to its implementation in a new
context.
Studies of the meaningful aspects of
institutionalization call our attention to the
peculiarities and embeddedness of institu-
tionalization. Rather than viewing it as a uni-
versal process, they highlight its particularity
and contextuality: the specific contents of
institutional structures and practices affect
their institutionalization, and those contents
are embedded within larger meaning systems.
Thus, to understand institutionalization, we
need to explore its meaningful particularities
and its context, both at the organizational and
interorganizational levels.
Institutionalization as
a political process
Power relations were always part of the insti-
tutional model. However, early formulations
highlighted the overwhelming, deterministic
power of the institutional order over anyone
operating within it. Only with Oliver’s paper
on strategic responses (1991) we see a move
to ‘empower’ the actors vis-à-vis the institu-
tionalized structure. And only after
DiMaggio’s (1988) call for a perspective
which takes politics into account, do we start
to see explorations of power and politics by
and between various actors. Recent studies
157
have picked up this emphasis and showed
how power and power relations are articu-
lated through meanings. They show that
since relevant institutional meanings are like
cultural building blocks that are multiple
(Friedland & Alford, 1991) and nested within
each other (Holm, 1995), actors must choose
and manipulate them in the process of inter-
pretation. And actors do so in relation to
conflicting interests and in lieu with their
different subject positions (Maguire, Hardy
& Lawrence, 2004). Instilling institutional
structures and practices with meaning is thus
interest-driven and carried out through power
relations dynamics.
These dynamics are especially apparent in
the context of institutional change (e.g. Arndt
& Bigelow, 2000; Borum, 2004; Carruthers
& Babb, 1996; Creed et al., 2002;
Greenwood et al., 2002; Munir & Phillips,
2005; Oakes, Townley & Cooper, 1998;
Suddaby & Greenwood, 2005), as well as in
the creation of new institutions (e.g. Dejean,
Gond & Leca, 2004; Lounsbury & Pollack,
2001; Maguire et al., 2004; Maguire &
Hardy, 2006). For example, Munir and
Phillips (2005) explore the efforts made by
Kodak to transform the depiction of photog-
raphy as a way to push forward its new tech-
nology. Based on the analysis of texts created
and disseminated by Kodak (advertisements,
company documents and annual reports), as
well as industry reports, trade journals,
newspapers, historical accounts of photogra-
phy and photographic technology and the
historical period more generally, they offer
an account of Kodak’s introduction of the
roll-film camera in 1882. They show how
Kodak, as an institutional entrepreneur,
‘engage(d) in discursive strategies to
transform the “meaning” embodied by par-
ticular technologies, by producing new
concepts, objects and subject positions’
(p. 1666).
Similarly, Oakes, Townley and Cooper
(1998), in their study of the introduction of
business planning to the provincial museums
and cultural heritage sites of Alberta,
Canada, explore the way business planning is
158 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
a political tool, by virtue of its ‘monopoly of
legitimate naming’, that is by its ability to
define meanings: ‘They actively construct
the seeable and the sayable by specifying
what will be documented and what will be
ignored … Through a process of naming,
categorizing, and regularizing, business plan-
ning replaced one set of meanings, defined
by the producers within the field, with
another set that was defined in reference to
the external market’ (p. 273, 277). As well,
Greenwood, Suddaby and Hinings (2002),
studying the change in the jurisdiction of
accounting firms in the field of professional
business services in Alberta, Canada, explore
the way professional associations actors aim
at legitimating change by theorizing it – that
is by interpreting, representing and translat-
ing relevant issues in a way that justifies the
change. Based on the analysis of archival and
interview data, they offer a model of
institutional change that highlights the role of
such theorization in the diffusion of new
institutional practices.
The very ability to theorize, or offer theo-
rizations for public consumption, is political
in nature. Maguire, Hardy and Lawrence
(2004), who highlight the role of theorizing
in the entrepreneurial activity behind the
emergence of the field of HIV/AIDS treat-
ment advocacy in Canada, explore the way
entrepreneurs work to occupy subject posi-
tions that will allow them to engage in such
theorization and confer legitimacy over the
new practices they advocate.
These studies exemplify then the power of
language and of actors in the processes of insti-
tutional change and emergence, as language
constructs reality in lieu of the agenda of insti-
tutional actors. This is not a simple process.
Institutional entrepreneurs need to balance nov-
elty and tradition, as they try to frame new (or
changing) practices in ways that will provide
them legitimacy and will not raise too much
resistance (Lounsbury & Pollack, 2001). Such
framing may involve some manipulations of
meaning, creatively tailoring accounts that
(hopefully) serve actors’ interests (Arndt &
Bigelow, 2000; Hargadon & Douglas, 2001).
The struggle over meaning involved in
institutionalization is especially apparent in
studies that follow discursive efforts of
competing institutional actors. Creed, Scully &
Austin (2002) follow the way various
actors offer different ‘legitimating accounts’
for and against policies that rule out work-
place discrimination on the basis of sexual
orientation and identity. Based on the analy-
sis of public testimonies, media accounts,
position papers and interviews with relevant
workplace activists, they identify five differ-
ent frames used by different parties to the
debate, each connected to different cultural
building blocks, and invoking different social
identities. Suddaby and Greenwood (2005)
follow the various rhetorical strategies used
by competing parties in their efforts to
(de)legitimate an institutional change. Using
the emergence of a new organizational form –
multidisciplinary partnership – as their case
study, they explore the jurisdictional struggle
between proponents and opponents of the
innovation. They show that this struggle was
taking place on a rhetorical level. The two
parties – each comprising a multitude of
organizational actors – made up two
discursive communities. They used different
institutional vocabularies (arguments and
words) and relied upon different texts to
invoke two different logics of professional-
ism, according to which legitimacy should be
established. As well, each party relied upon
and invoked different understandings of
change. Proponents and opponents of the
new organizational form used, then, various
institutional vocabularies, and relied upon
various understandings of change as part of a
political effort to further their interests
through this discursive struggle.
Hence, rather than seeing institutions as
all-encompassing, deterministic and hege-
monic forces, the exploration of meanings
highlights the political nature of institution-
alization (Phillips et al., 2004). Studies of
meanings (re-framing, re-packaging,
theorizing, etc.) all ‘highlight the often
contested and incomplete character of insti-
tutionalization projects, often neglected in
 THE WORK OF MEANINGS IN INSTITUTIONAL PROCESSES AND THINKING
standard accounts of new practice diffusion’
(Lounsbury & Pollack, 2001: 321). Meanings
are thus understood as an institutional
resource (Rao, Morrill & Zald, 2000),
offered as well as constrained by the institu-
tional context (Lounsbury & Pollack, 2001).
Various parties strive to further their interests
by manipulating this resource (thus offering
an interpretation of existing, changing or new
structures and practices that suit their
interests). No less important, the study of the
interface of power and meanings joins the
recent interest in agency in institutional
process, as it shows how interpretation
(meaning making) is a form of agency
(Zilber, 2002), and it calls our attention to
what Lounsbury and Glynn (2001) termed
‘cultural entrepreneurship’: Interpretative
and symbolic work that aims at legitimating
new structures and practices.
Institutionalization as
a work in progress
The emphasis on specificity, contexts and
politics brings to the fore the multiplicity of
the institutional order. We have multiple
meaning systems, multiple actors who hold
multiple interests and who work in relation to
multiple contexts. They may or may not
share the same understandings, and they
instill institutional structures and practices
with meanings, at least part of the time, to
further their own interests. Thus, institution-
alization is understood as fluid and dynamic,
as an on-going process rather than an end
point (DiMaggio, 1988). Meanings are cen-
tral to our understanding of institutionaliza-
tion as work-in-progress. One very
well-documented area in this regard is the
institutionalization of law. As Edelman,
Uggen and Erlanger (1999) show in their
study of the institutionalization of grievance
procedures, ‘the meaning of law regulating
organizations unfolds dynamically across
organizations, professional, and legal fields
… the content and meaning of law is deter-
mined within the social field that it is
159
designed to regulate’ (p. 406–7). Based on
the analysis of professional personnel litera-
ture, survey of organizational practices, and
relevant legal cases, they follow the develop-
ment of a shared definition of compliance
with civil rights law. Many parties took part
in this process of construction of the law,
among them organizations, personnel profes-
sionals, and the courts. Central to this
process of constructions were the meanings
infused into organizational practices that
were constructed as singling compliance
with the law and thus sheltering organiza-
tions from legal intervention. While at the
beginning these meanings were ‘myths,’ that
is they had no foundation in legal reality,
with time they became rational as the courts
adopted them. This and other studies of the
institution of law (e.g. Christensen &
Westenholz, 1997; Edelman, 1992; Edelman,
Abraham & Erlanger, 1992) testify then to
the on-going process of institutionalization,
and the important role of meaning in it. In the
same vein, Grattet and Jenness (2001) follow
the construction of ‘hate crimes’ as a policy
domain in the US in the past four decades,
highlighting the interrelations of multiple
actors in the process. Based on an historical
analysis, they chart the roles of social
movements and interest groups in bringing
the idea of hate crime to social attention, the
role of legislatures in translating it into
federal and state legislation, the role of the
courts in the interpretation of these laws, and
of the police and prosecution in enforcing it.
Their analysis highlights, once again, the role
of meaning in institutionalization: ‘In its
journey from social movement frame to leg-
islative concept to judicial theory to law
enforcement practice, the meaning and
policy significance of hate crime have under-
gone a series of transformations. … each
change reflects the unique demands placed
on the concept in the different institutional
arenas that compose the American policy
process. Its meaning has been pushed and
pulled in new directions both within and
across each new context, mutating in ways
that ensure constancy as well as innovation’
160 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
(p. 691). Specifically, their analyses show
that in each institutional arena, policy
concepts like ‘hate crime’ go through a
common process of solidification, by which
its definition becomes, at the same time,
more specific and restricted, as well as
expanding to new circumstances. More
generally, then, these and other studies
(e.g. Anand, 2005; Anand & Peterson, 2000;
Phillips & Hardy, 1997) explore the central
role of meanings and interpretations in the
on-going construction of organizational
fields.
Moreover, institutions are not fixed, but
may change, in response to field-level or
environmental changes (e.g. Reay &
Hinings, 2005). Changes call for more inter-
pretations and theorizing, as the reshuffling
of the institutional order needs to be legiti-
mated (e.g. Greenwood et al., 2002).
‘Change’ itself need to be constructed as
such (Munir, 2005). While the meaningful
dynamics of institutionalization are espe-
cially apparent in the emergence of new insti-
tutions or change of existing ones, many
studies show that even after structures and
practices are institutionalized, their meaning
still undergoes changes. In an early study that
set the path to many ideational explorations
of institutionalization, Hirsch (1986) showed –
based on business periodicals, interviews
and transcripts of congressional reports and
hearings and other publications – how the
‘normative framing’ of corporate takeovers
changed in tandem with the growing spread
of the practice. With time, the depiction of
takeovers – ‘the language used, the rituals
followed, and the meanings attributed to the
event sequence by participants and close
observers’ (Hirsch, 1986: 802) turned from
negative to positive. This linguistic framing,
Hirsch argued, served various cognitive,
social-psychological, and institutional
functions, all facilitating the diffusion of the
practice. This and other studies (e.g. Baron,
Dobbin & Jennings, 1986; Baron, Jennings
& Dobbin, 1988; Dobbin, Sutton,
Meyer & Scott, 1993; Kelly & Dobbin, 1998)
show how cultural framings change with the
institutionalization of structure and prac-
tices, influencing the very process of
institutionalization.
Recent studies go further, trying to unpack
the underlying processes. For example,
Ocasio and Joseph (2005) followed the evo-
lution of vocabularies of ‘corporate gover-
nance’ in the past three decades. Based on the
analysis of media coverage in the New York
Times, a multitude of documents, and popu-
lar and academic literature on corporate gov-
ernance, they construct an historical account
of the developments in the meanings of the
term. Based on this case study, they offer an
evolutionary model of vocabulary change,
one that depicts mechanisms of
variation, selection and retention on the
linguistic level. For example, linguistic
variation stems from non-routine events that
need to be interpreted and cannot be
explained using current vocabularies.
Selection is partially based on the resonance
of new or diffusing terms with already
accepted concepts. And retention is achieved
through theorization that stabilizes and
reproduces the meanings and vocabularies
in use.
Interestingly, it seems that the very process
of institutionalization changes the relevant
field in ways that require further changes
in the framing of those institutionalized
structures and practices. Lounsbury’s and
Pollack’s (2001) study of service learning
in US higher education exemplifies this
complicated dynamics. Based on interviews
and the analysis of primary and secondary
documents and trade periodicals, they
follow the institutionalization of a new way
of learning and knowing – through personal
experience in the community, termed
service-learning. They show how the packag-
ing of service-learning in US higher educa-
tion was changed through the years. Whereas
early on, in the 1960s, service-learning was
portrayed in revolutionary terms, as a means
to transform higher education, in the 1980s it
was framed within a functional discourse that
highlighted its capacity to improve students’
learning. They explain this change in relation
 THE WORK OF MEANINGS IN INSTITUTIONAL PROCESSES AND THINKING
to the dialectics of a change in the broader
higher-education field, as well as the specific
field of service-learning itself. The field of
service-learning is embedded within the field
of higher education in which a change from
closed to open-system logic took place, thus
creating the space for institutional change,
enabling the institutionalization of the
innovative service-learning. But the very
institutionalization of service-learning
entailed a change in its packaging. In its early
days, a revolutionary framing made sense,
and was in line with the norms of the era. But
as service-learning became the mainstream,
such framing became too threatening, and
thus the transformation into a more func-
tional framing, which again was also more
in line with the spirits of the time. Thus,
meanings are essential not only to the initia-
tion of institutional change, but also to its
constant maintenance.
Indeed, the recent interest in institutional
work and especially institutional
maintenance (Lawrence & Suddaby, 2006)
draws attention to the continuous processes
of construction that are part of institutional-
ization. The on-goingness of institutions may
be especially apparent in its meaningful
dimensions, as it is argued that symbols and
meanings themselves are never stable: ‘the
essence of a sign is that its meaning can never
be determined once and for all by a given lin-
guistic system, but always has the capacity to
break with a context and take on different con-
notations. The sign is thus overflowed by a
plurality of signification, which cannot be
finally stabilized’ (Howarth, 1998: 273, and
see Derrida, 1982: 320–321). The meaning of
institutional structures and ractices – like laws,
higher education or economic practices –
evolves dynamically, with various actors
engaged in negotiations and power plays, all
embedded within multiple fields and contexts
(Edelman, Uggen & Erlanger, 1999; Zilber,
2008). Institutionalization is thus not only
about outcomes, but about the very process
(Zucker, 1987) of how it is worked out con-
stantly, and the important role of meanings in
that process.
161
Thinking of meaning and
institutionalization: theorization,
translation and discourse
Many of the institutional studies of the 1980s
and early 1990s were based on, and con-
tributed to, the conceptualization of institu-
tionalization as diffusion (Creed et al., 2002;
Czarniawska & Joerges, 1996; for a review,
see Strang & Soule, 1998). They followed
the diffusion of structures and practices
across an institutional field, using quantita-
tive, longitudinal and macro-level method-
ologies based on a positivistic paradigm. The
imagery of institutionalization created by
this set of studies was of a universal and
deterministic process, made of clearly
defined and clear-cut steps (Sahlin-
Andersson, 1996): More and more firms
adopted – sooner or later – a certain institu-
tionalized structure or practice. Adoption
itself was measured in clear-cut terms. So,
while institutionalization was understood as
a dynamic process, the process itself, once
set forth, was not problematized. It was con-
sidered a question of volume (how many
firms adopted) rather than quality (what does
it mean to adopt, what is exactly adopted).
Moreover, the focus on diffusion ‘across a
single community’ (Strang & Soule, 1998:
279) created a sense of a universal, homoge-
neous process of diffusion, one that is
affected by characteristics of the population
and its interrelations, no matter where it
resides. Finally, since those were macro-level
studies, usually focusing on the field level,
they neglected micro processes, including
issues of power and politics (DiMaggio,
1988).
Empirical studies of ideational aspects of
institutionalization, which highlighted the
particular, contextual, conflictual and
on-going processes constituting the institu-
tional order, were coupled by more explicit
theoretical formulations of the dynamics of
meaning. These theoretical formulations sug-
gest at times alternative conceptualizations
of the very notion of institutionalization.
Thus, to begin with Strang and Meyer (1993)
162 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
offered the concept of ‘theorization’ as a crit-
ical component for diffusion, whereas
Czarniawska and Joerges (1996) and Sahlin-
Andersson (1996) suggested we should
depart from ‘diffusion’ and use ‘translation’
and ‘editing’ instead as depictions of the
institutionalization process. Most recently,
Phillips, Lawrence and Hardy (2004)
conceptualized institutions as ‘discourse’ and
thus once again offered a new way to under-
stand institutionalization.
While early studies of institutionalization
as diffusion were ‘rich in structural mecha-
nisms’ (Strang & Soule, 1998: 270), Strang
and Meyer (1993: 492) argued that social
practices are always accompanied by
‘theorized accounts’ which play a central
role in the very process of diffusion.
‘Theorized accounts’ chart abstract
categories and outline the relationships
between them (e.g. cause-and-effect). They
are produced as part of the efforts to make
sense of the world, and are the result of both
individual-specific theorizing, and the influ-
ence of globally available theories and
models, promoted by ‘culturally legitimated
theorists’ (Strang & Meyer, 1993: 494–495)
– like scientists, intellectuals and profession-
als. Strang and Meyer (1993) hypothesized
that theorizing is a diffusion mechanism so
that the more theorization is complex and
rich, diffusion will be more rapid, and less
dependent on social relations (for empirical
examples, see Greenwood et al., 2002; Kelly
& Dobbin, 1998).
Building on Latour (1986), Czarniawska
and Joerges (1996) went a step further by
suggesting an explicit new metaphor to the
very process of the spread of practices and
structures across organizations, that of
‘translation.’ The ‘diffusion’ metaphor
comes from physics and connotes a transmis-
sion of a given entity from one sphere to
the other. The ‘translation’ metaphor, by con-
trast, comes from linguistics and
connotes transformation so that whatever is
translated is being reshaped in a specific
context (Czarniawska & Sevon, 1996).
Thus, instead of thinking of adoption of fixed
structures, practices and meanings as they
move across various boundaries, we are deal-
ing with adaptation, the transformations of
ideational and material objects in the process
of their movement. Sahlin-Andersson (1996)
highlighted especially the role of meaning in
this process. Since most organizations do not
have a direct experience with the structures
or practices they implement, what they actu-
ally imitate are ‘rationalizations – stories
constructed by actors in the “exemplary”
organization, and their own translation of
such stories. The distance between the
supposed source of the model – a practice or
an action pattern – and the imitating organi-
zation forms a space for translating, filling in
and interpreting the model in various ways’
(Sahlin-Andersson, 1996: 78–79).
Phillips, Lawrence and Hardy (2004)
offered a conceptualization of institutions as
discourse, thus complementing the
translation metaphor with a more general
theoretical foundation, that of discourse
analysis (Phillips & Hardy, 2002).
Institutions, they argue, are ‘social construc-
tions constituted through discourse … the
structured collections of texts that exist in a
particular field and that produce the social
categories and norms that shape the under-
standings and behaviors of actors’ (p. 638).
Thus, the production of texts is viewed as
central to any institutional action. As actors
strive to make sense of reality and gain legit-
imacy, they produce texts. In order for these
texts to affect institutional processes, they
need to become part of the relevant
discourse. The genre of the texts, as well as
their producers, and the links between the
focal text and other relevant texts all influ-
ence their institutional impact. Once texts are
embedded in discourse, and as much as that
discourse is structured, coherent and
supported by other discourses, it produces
institutions, which in their turn enable and
constrain the production of more action,
texts, discourses and institutions in a cyclic
process. This conceptualization of institu-
tionalization as discourse highlights the role
of language and meanings in the process, and
 THE WORK OF MEANINGS IN INSTITUTIONAL PROCESSES AND THINKING
offers new ways to conceptualize and study
institutional fields and institutional entrepre-
neurship (see, for example, Maguire &
Hardy, 2006; Munir & Phillips, 2005).
Theorization, translation and discourse all
offer then complementary new ways to think
about the role of meaning, language and
interpretation in institutional processes, and
about institutionalization itself.
DISCUSSION
Meanings were at the heart of the neo-
institutional argument and contribution
(Farashahi, Hafsi & Molz, 2005; Hasselbladh
& Kallinikos, 2000; Glynn & Abzug, 2002;
Jepperson, 1991; Zilber, 2002). However,
early treatments of meaning were partial and
somewhat naïve. Meanings were mainly
understood in their formal characteristic.
Institutionalization meant that some
structures, practices and understandings have
come to be taken for granted. The content of
institutions and the dynamic of such
contents were not at center stage. It might be
even argued that many early neo-institutional
formulations were precisely saying that,
regardless of the content of institutions,
certain processes will take place (the same
disregard to particularities was evident in the
treatment of structures and practices). Early
theorists were talking then about meanings,
but in the abstract (or as a variable), regard-
less of their specific content or dynamics. In
lieu of these depictions of meaning, most
empirical studies of institutionalization
focused on structural or practical aspects,
using them as proxies of meaning, rather
than exploring meaning directly (Farashahi,
Hafsi & Molz, 2005; Hasselbladh &
Kallinikos, 2000; Glynn & Abzug, 2002;
Jepperson, 1991; Zilber, 2002). Thus, the
meaning of rationality itself was overlooked,
as rationality was treated as ‘transparent and
self-evident rather than meaningful’ (Dobbin,
1994a: 218). The very content of institutions
was neglected as well, as students of
163
institutional processes ‘do not have the theo-
retical tools by which to understand the insti-
tutional content whose diffusion they do
analyze’ (Friedland & Alford, 1991: 243–244).
Finally, the meaningful environment within
which institutions reside was left unexplored:
‘the social and cultural processes that make
up the project of rationalization and shape
the structure and functioning of work
organizations have either been bypassed or
given an exogenous status, reified to “real-
ity,” “society” or “environment” and treated
as independent variables in cross sectional or
longitudinal empirical research’ (Hasselbladh
& Kallinikos, 2000: 697–698).
Recently, however, we have seen a surge of
studies of meaning in institutional process.
Taken together, these studies help in adding
pluralism and variety back into institutional
theory (Glynn, Bar & Dacin, 2000) by setting
forth a new formulation of institutions and
institutionalization – that of a local and partic-
ularistic process, context-sensitive, conflictual
and on-going. They highlight anew the social
constructionist dimension of institutional
processes, thus reconnecting to the roots of the
neo-institutional school (though with modifi-
cations). They remind us that neo-institutional
theory ‘seeks to grasp not the universal laws
that generate social practice, but the social
practices that generate universal laws’
(Dobbin, 1994b: 123, emphasis in original).
Following Lawrence and Suddaby’s
(2006) notion of ‘institutional work,’ the
studies reviewed above highlight the ‘work
of meaning’ in institutional processes.
Meanings do not reside ‘out there,’ but
rather are socially constructed, and as such
they take part in the social construction of
institutions themselves (Berger & Luckman,
1966). The work of meaning refers to the
interpretations, understandings and shared
beliefs that are produced and processed
through social action, and specifically
through the efforts of institutional actors
engaged in power relations and political
negotiations, as these are all embedded
within particular sociocultural and historical
moments.
164 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
To further develop these understandings of
institutional processes, students of meaning
need to make more efforts at building upon
existing theoretical formulations and further
exploring the theoretical implications of their
findings; bridge the current division of labor
between studies of the material and
ideational aspects of institutionalization;
explore meaning in action; and renew our
interest in organizations as meaning systems.
Qualitative, linguistic and discursive
inquiries in organization studies have been
blamed for being anecdotal, for concentrat-
ing ‘on symbols per se rather than on their
relationship to other aspects of organiza-
tional life. It is, therefore, perhaps unsurpris-
ing that what was originally hoped would be
a means of enriching our understanding of
organizational processes has effectively been
isolated from the mainstream of organiza-
tional studies’ (Brown, 1994: 874). Indeed, in
writing this review I was struck by the gap
between the implicit theoretical implications
of the collection of studies reviewed above,
taken as a whole, and the deficiency in
explicit theoretical articulations within them.
Specifically, while many of these studies
offer rich and thick descriptions of interest-
ing case studies, they by and large do not
build upon or correspond with current
conceptualizations of the work of meanings
(e.g. theorizing, translation, discourse). To
make a difference within the field of institu-
tional theory, studies of meanings must
explore the dynamics and micro-processes of
theorizing, translation and discourse, and,
once again, explicitly articulate their
implications for our understanding of the
social construction of institutions and the
institutional order.
Another potential avenue for further devel-
opment of institutional theory through the
study of meanings is by integrating the study
of the structural and practical with that of the
ideational and meaningful. To date, there is a
division of labor between the diffusion and
translation/discursive models. Of course,
these are two ideal types (in the Weberian
sense) and no individual study fits any of
them perfectly. Still, the two models or
metaphors represent two different ontologi-
cal, epistemological and methodological
approaches and result in different research
agendas, and thus in different understandings
and depictions of the subject matter itself –
that is of institutionalization. The division of
labor between them is quite reasonable in
terms of paradigmatic consistency, yet it
limits the field as a whole. We know much
about the ways structures and practices dif-
fuse within a field. In recent years we also
came to know much on how meanings are
translated as they travel a field. However,
what about the interrelations between them?
Is it possible to account, within one model,
for the dynamics of the material and the
ideational? Are there ways to bridge this con-
ceptual as well as methodological
dichotomy, and explore the interrelations
between practices/structures and meanings?
Whether positivistic or constructivist in
approach, researchers of institutionalization
should be sensitive to the dynamics of
meaning in the process, and find proxies and
measures that more closely adhere to both
meaning systems and structural indicia of
institutional processes. To date, there are
only a few attempts at doing so (e.g. Rao,
Monin & Durand, 2003).
While the integration of positivistic and
constructionist approaches may yield
interesting insights into institutional
processes, studies of meanings may also gain
insights from more sophisticated research
designs. Studies of the discursive tend to
focus on archival data, using various kinds of
texts that are relatively accessible, like
proceedings, professional and general media
coverage and interviews. Fewer studies
treated the dynamics of the discursive as a
collective, on-going phenomenon. Thus, we
are still lacking an understanding of ‘the
enactment of beliefs over time’ (Porac,
Ventresca & Mishina, 2002: 595). We are
still missing in-situ and in-vivo studies of
meanings ‘in action,’ the way meanings are
enacted (e.g. Zilber, 2007). Studying
the on-going and unfolding processes of
 THE WORK OF MEANINGS IN INSTITUTIONAL PROCESSES AND THINKING
institutionalization will allow us to overcome
a serious bias in the study of institutional
processes – the fact that most studies are
retrospective and examine successful institu-
tional processes. We do not know what hap-
pens in attempts at institutionalization that
fail. Specifically, in regards to meaning, what
happens when one party tries to instill a
certain institutional order or change of mean-
ings, and fails? How do other parties reject
those meanings, and how can we account for
the reasons and dynamics of that process?
This may help us achieve a better and deeper
understanding of the micro-processes
involved in the theorization or translations of
meanings. Furthermore, in-vivo and in-situ
studies that will combine institutional theory
with insights from other relevant research
streams, like organizational sense-making
(Weick, 1995) and interorganizational
cognition and interpretation (Porac,
Ventresca & Mishina, 2002) may yield new
understandings of institutionalization.
Finally, studies of meaning may gain much
from re-focusing our attention, as institutional
scholars, on the organizational level of analy-
sis. While the early (‘old’) institutional school
dealt with the organizational level, later works
tended to focus on the interorganizational
(field) and above (societal, world-polity) levels
(DiMaggio & Powell, 1991). While these
studies offer many valuable insights re the
dynamics of meaning in the field and wider
environments (as reviewed above), we are left
to wonder how these dynamics affect life
within organizations. We need to analyze more
the core meanings of organizations and organ-
izing: How goals are set, strategic plans
defined, and resources depicted. How evalua-
tion and control systems are formalized and
how decisions are taken to make sense – and
how these intense processes of meaning-
making are embedded within wider, institu-
tional dynamics of meaning. Re-connecting
institutional theory with the organizational
level may yield not only insights about mean-
ing, but rejuvenate institutional theory itself,
by making it more relevant to other theoretical
schools and to practitioners as well.
165
NOTES
1 However, this was not a criteria in my search, as
there are studies of meaning which use quantitative
methods (e.g. Edelman, Uggen & Erlanger, 1999;
Rao, Monin & Durand, 2003), and some qualitative
studies of institutional processes that do not explore
meanings and their dynamics (e.g. Child & Tsai,
2005; Edwards, Almond, Clark, Colling & Ferner,
2005).
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Power, Institutions and
Organizations
INTRODUCTION
The relationship between power and institu-
tions is an intimate one. Institutions exist to
the extent that they are powerful – the extent
to which they affect the behaviors, beliefs
and opportunities of individuals, groups,
organizations and societies. Institutions are
enduring patterns of social practice (Hughes,
1936), but they are more than that: institu-
tions are those patterns of practice for which
‘departures from the pattern are counteracted
in a regulated fashion, by repetitively acti-
vated, socially constructed, controls – that is
by some set of rewards and sanctions’
(Jepperson, 1991: 145). Thus, power, in the
form of repetitively activated controls, is
what differentiates institutions from other
social constructions (Phillips, Lawrence &
Hardy, 2004). The relationship between
power and institutions is also bi-directional.
A significant stream of research has docu-
mented the processes through which actors,
individual and collective, affect the
institutional contexts within which they work
(Lawrence & Suddaby, 2006). This
brings agency and interests directly into the
6
Thomas B. Lawrence
relationship between power and institu-
tions (DiMaggio, 1988), and has been exam-
ined primarily under the rubric of
institutional entrepreneurship (see Chapter 7
in this volume for an overview of this
literature), and increasingly also in terms
of the role of social movements in
institutional change (see Chapter 27 in this
volume).
The relationship between power and insti-
tutions was ignored in early neo-institutional
theory but has been addressed in more recent
institutional studies of organization. The first
wave of neo-institutional research in the late
1970s and 1980s focused primarily on insti-
tutions as myths and ceremony (Meyer &
Rowan, 1977), and in so doing tended to
avoid language that would associate institu-
tions and power. The research in this period
concentrated significantly on demonstrating
that enduring organizational structures and
practices were often the result of institutional
processes, and especially mimetic processes
whereby organizations adopted practices
based on a need for legitimacy or to avoid
uncertainty, rather than some ‘rational’
search for efficiency or effectiveness
(DiMaggio & Powell, 1983; Hinings &
 POWER, INSTITUTIONS AND ORGANIZATIONS
Greenwood, 1988; Tolbert & Zucker, 1983).
More recent work on institutions has moved
away from the focus on demonstrating the,
usually isomorphic, effects of institutions to
exploring the roles of conflict, politics and
agency in the evolution of organizational
fields. This includes work that examines the
political effects of competing institutional
logics (Thornton, 2002; Thornton & Ocasio,
1999), the role of institutional arrangements
in creating political opportunities and medi-
ating the influence of political actors
(Amenta & Halfmann, 2000; Amenta &
Zylan, 1991; Bartley & Schneiberg, 2002),
the intersection of social movements and
institutional change (Lounsbury, 2001;
Lounsbury, Ventresca & Hirsch, 2003), and
the role of institutional entrepreneurs in
creating and transforming institutional
conditions (DiMaggio, 1988; Garud, Jain &
Kumaraswamy, 2002; Maguire, Hardy &
Lawrence, 2004).
These recent streams of research point to
the importance of considering power and
politics when examining institutions and
institutional change. They demonstrate that
incorporating power is critical to understand-
ing how institutions operate in society and
their relationship to organizations. Drawing
principally on case studies of organizational
fields or instances of social policy, this work
has provided significant insights with respect
to the dynamics of institutional politics
(Bartley & Schneiberg, 2002; Stryker, 1994,
2000) and the institutional strategies associ-
ated with different kinds of actors or different
contexts (Greenwood & Suddaby, 2006;
Lawrence, 1999; Maguire et al., 2004).
Missing in this work, however, is a
systematic, theoretical consideration of the
relationship between power and institutions.
In this chapter, I begin to address this issue
by developing an organizing framework
for understanding the multi-dimensional
relationship between power and institutions,
and exploring some of the implications of that
framework. I argue that the relationship
between power and institutions has three
dimensions – institutional control, institutional
171
agency, and institutional resistance – each of
which describes an aspect of how institutions
and actors relate to each other in terms of
power relations. Institutional control involves
the effects of institutions on actors’ beliefs
and behavior; institutional agency describes
the work of actors to create, transform and
disrupt institutions; and, institutional resist-
ance represents the attempts of actors to
impose limits on institutional control and
institutional agency. Although each of these
dimensions has been the subject of significant
study, either within the institutional literature
or, in the case of institutional resistance, out-
side that literature, there has been little
recognition either of the fundamental role of
power in each case, or in their status as ele-
ments of an interlocking system of institu-
tional politics.
I develop and explore this framework in
four steps. First, I outline the notion of insti-
tutional politics and each of its three dimen-
sions. The second and third sections examine
institutional control and institutional agency,
respectively. In each of those sections, I first
discuss relevant institutional research, and
then turn to forms of power that might under-
pin each dimension – discipline and domi-
nation in the case of institutional
control, and influence and force in the case of
institutional agency. I conclude each of those
sections with a discussion of resistance.
I argue that the dynamics of institutional resist-
ance depend on the form of power to which it
is a reaction, and so embed my discussion of
institutional resistance within the sections on
institutional agency and institutional control,
rather than treating it separately. I conclude the
paper with an exploration of a set of issues that
emerge from the framework and point to some
future directions for research on power, organ-
izations and institutions.
THE POLITICS OF INSTITUTIONS
Overview
Holm’s (1995) study of institutional change in
Norwegian fisheries highlights the potential
172 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
analytical power of adopting an explicitly
political stance on institutions and institu-
tional change, as well as suggesting the
contours of what a political perspective on
institutions might look like. Holm’s (1995:
398) analysis explains the ‘rise and fall of a
specific institutional form, the mandated sales
organization (MSO), in Norwegian fisheries’,
focusing on the ‘interconnection between the
practical and political levels of action’,
and the ‘interaction of practices, interests, and
ideas’. This work highlights the power of a
number of institutions and a range of politi-
cal/institutional strategies. I draw on it here to
illustrate the theoretical framework for
connecting power and institutions that I
develop in the rest of the chapter.
The central institutional battle (Hoffman,
1999) in Holm’s (1995) story is between the
fishers and the fish merchants of Norway.
Holm’s (1995: 404) first example of institu-
tional change in this battle provides a clear
example of the relationship between power
and institutions:
The fishermen’s common interest lay in restricting
the supply of herring, which would bring better
prices. As long as they acted individually, this option
was not available. To solve their dilemma, the fish-
ermen had to set up a rule system that allowed
them to market their herring collectively. … If we
simply assume that the fishermen in this situation
were rational and acted individually, we cannot
account for the fact that [the rule system] was
established and successfully organized the herring
trade for two years without legal protection.
To explain this, we must look into the pattern of
interaction among the fishermen. The herring
fishery in question was largely concentrated both
in time and geographically, and the fishermen
largely came from the same area, had the same
social background, and operated the same type of
technology.
The rule system enacted by the fisher-
men is a classic example of an institution –
a set of practices, for which com-
pliance is enforced through social and
cultural mechanisms, in this case implicitly
through mechanisms of surveillance and
shaming that are made possible by
dense patterns of interaction and common
cultural backgrounds (Douglas, 1973).
This institution effected a set of power rela-
tions, directly between the rules and the
fishermen, and indirectly between the fisher-
men and the fish merchants who now faced a
powerful, organized collective actor, rather
than a set of relatively weak, unorganized
individual fishermen.
In further describing this example,
Holm (1995:405) points to a second
type of relationship between power and
institutions.
A rule making all fishermen sell their catch through
the organization, enforced by police and the
legal apparatus of the Norwegian state, would
immediately solve the free-rider problem.
Mobilizing the state’s power behind the fisher-
men’s institutional project in this way was not a
simple matter, however. It would require, first, that
the fishermen’s problem could be made so
important that it warranted a place on the
political agenda; second, that the fishermen’s
solution would survive through the various
stages of the decision-making process; and
third, that the required number of votes be cast in
their favor.
Thus, the system of rules that would bind
the fishermen together and unite them
against the fish merchants did not just appear,
but required significant, complex forms of
institutional work (Lawrence & Suddaby,
2006). In order to institutionalize the rule in
law, the fishermen would need to engage in
discursive strategies intended to frame the
problem as important, as well as building and
leveraging relationships with governmental
actors who could shepherd the project
through the bureaucracy. Thus, as much as
institutions are connected to power through
their impact on the beliefs and behaviors of
actors, they are also connected to power
through the strategies of actors that are
intended to transform institutional arrange-
ments through political means.
The contours of power and institutions in
Holm’s (1995) study illustrate the theoretical
framework that guides the exploration of
power and institutions in the rest of this chap-
ter. These contours represent what I refer to as
the ‘institutional politics’ of a situation.
The concept of institutional politics, I argue,
 POWER, INSTITUTIONS AND ORGANIZATIONS 173

has three dimensions which need to be taken
into account in order to understand how and
why institutional arenas are shaped and
changed in the way they are (see Figure 6.1).
Each of these dimensions describes a role that
power plays in shaping the relationship
between institutions and actors. I describe the
first role of power as ‘institutional control’,
and illustrate it with the solid-line arrow
pointing from ‘Institutions’ to ‘Actors’ in
Figure 6.1. Institutional control describes the
impact of institutions on the behaviors and
beliefs of individual and organizational
actors. In research that has highlighted this
role, power is present but usually appears
only indirectly, observable primarily through
the compliance of organizational actors to
institutional rules and norms (DiMaggio &
Powell, 1983; Meyer & Rowan, 1977; Tolbert
& Zucker, 1983).
The second role of power is ‘institutional
agency’, represented in Figure 6.1 by the
solid-line arrow pointing from Actors
to Institutions. Institutional agency is con-
ceived of here as the work of individual and
collective actors to create, transform, and
disrupt institutions. Research that has high-
lighted this role has made power explicit,
highlighting the connection between power
and agency, and the influence of actors on
institutional arrangements (DiMaggio, 1988;
Greenwood et al., 2002; Maguire et al., 2004;
Greenwood & Suddaby, 2006).
The third, and least well-understood role of
power with respect to institutions is what I
refer to as ‘institutional resistance’ – the work
of actors to impose limits on both institutional
agency and institutional control. Although
this role of power was highlighted by Oliver
(1991), its dynamics have been relatively neg-
lected in most institutional studies of organi-
zation. The interplay of these three roles in an
organizational field can be described as the
‘institutional politics’ of a situation.
Power and institutional politics
Before exploring each dimension of institu-
tional politics in the rest of this section,

Institutional control
Institutions The impact of
institutions on the
beliefs and
behaviors of actors.

Institutional resistance
Systemic power
Episodic power The work of actors to
- Discipline
- Influence resist institutional
- Domination
- Force control
and agency.

Institutional agency
The work of actors to
create, transform,
maintain and disrupt Actors
institutions.

Figure 6.1 Institutional politics – the interplay of institutional control, agency and resistance
174 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
I want to first provide an overview of the
approach I take to power in this chapter, and
the specific terminology I adopt. The study
of power has long been a central element of
organization studies, with a large and long-
standing literature on what leads to individu-
als, groups and organizations gaining power
relative to others (Bachrach & Lawler, 1980;
Brass, 1984; Clegg & Dunkerly, 1984;
Hickson, Hinings, Schneck & Pennings,
1972; Jermier, Knights & Nord, 1994;
Mintzberg, 1983; Pfeffer, 1981; Pfeffer &
Salancik, 1978). The variety of approaches
and theories has meant that the concept of
power has been defined in a wide range of
ways. In this chapter, I adopt the view that
power is a property of relationships such that
the beliefs or behaviors of an actor are
affected by another actor or system. Thus,
power is a relational phenomenon, rather
than a commodity (Clegg, 1989; Clegg,
Courpasson & Phillips, 2006; Foucault,
1977): it is understood here as an effect of
social relations, rather than something an
actor can ‘have’, ‘hold’ or ‘keep in reserve’.
So, when I talk about power in this chapter, I
do not refer to a capacity for effect, but rather
the aspect of relationships in which there is
an effect.1
This definition of power leads to a distinc-
tion between two basic modes in which power
operates and which corresponds in large part
to the dimensions of institutional politics
described above. The first mode of power is
‘episodic’, which refers to relatively discrete,
strategic acts of mobilization initiated by self-
interested actors (Clegg, 1989). Historically,
this mode of power has dominated the study
of power in organizations through the devel-
opment of two streams of theory (Hardy &
Clegg, 1996); one focusing on power as dom-
ination through ownership and control of the
means of production (Braverman, 1974;
Buroway, 1979; Clegg, 1975; Clegg &
Dunkerly, 1980); and one focusing on the role
of power as an alternative to formal authority
in organizations (Hickson et al., 1972;
Mintzberg, 1984; Thompson, 1956). The
second mode of power is ‘systemic’ – power
that works through routine, ongoing practices
to advantage particular groups without those
groups necessarily establishing or maintaining
those practices (Clegg, 1989; Foucault, 1977;
Hardy, 1994; Laclau & Mouffe, 1985).
Systemic forms of power are associated with a
wide range of phenomena, including social-
ization and accreditation processes (Covaleski
et al., 1998), technological systems (Noble,
1984; Shaiken, 1984), and insurance and tax
regimes (Simon, 1998). These forms of power
tend to work in an ongoing, prosaic fashion
that are often not apparent as forms of power
(Covaleski et al., 1998; Townley, 1993).
As illustrated in Figure 6.1, I argue that
institutional agency is underpinned by
episodic forms of power. Institutional agency
requires actors to mobilize resources, engage
in institutional contests over meanings and
practices, develop, support or attack forms of
discourse and practice – all involving discrete,
strategic acts of mobilization. In this chapter,
I explore two forms of episodic power that
I argue are fundamental to institutional
agency – influence and force. I further argue
that institutional control is associated with
systemic forms of power. As discussed above,
Jepperson (1991) argues that institutions are
associated with automatic forms of regulation
that enforce compliance, without involving
episodes of action on the part of interested
actors. Regulations, norms and taken-
for-granted understandings have their roots, of
course, in self-interested behavior, but once
established and associated with sets of social,
cultural or cognitive ‘stakes’ (Bourdieu,
1993), institutional control operates as if
significantly independent of any particular
agent, or at least independent of the interests
of such an agent. In examining the relation-
ship between institutional control and sys-
temic forms of power, I concentrate here on
two such forms – discipline and domination.
INSTITUTIONAL CONTROL
The concept of institutional control parallels
the classic sociological notion of ‘social
 POWER, INSTITUTIONS AND ORGANIZATIONS
control’, which ‘referred to the capacity of a
society to regulate itself according to desired
principles and values’ (Janowitz, 1975: 82).
Working from an institutional perspective,
our concern is not with the ability of societies
to regulate themselves, but with the ways in
which institutions organize, encourage
and diminish particular forms of thought and
action in organizational fields. Thus, there
are two important conceptual shifts in
moving from a focus on social control to
institutional control. First, consistent with
the more general shift in discussions of
power (Clegg et al., 2006), institutional
control is not understood as a capacity but as
a relational effect of institutions on actors.
The second shift is toward an understanding
of social systems as fragmented, contested
arenas in which coherent sets of ‘desired
principles and values’, are less likely than are
competing and conflicting principles and
values enacted in discourse and action (Dyck
& Schroeder, 2005; Hoffman, 1999).
In order to clarify the nature and scope of
institutional control, we can contrast it with
resource dependence as a basis for inter-
organizational control. Drawing on exchange
theory (Emerson, 1962), Pfeffer and Salancik
(1978) argue that the critical determinant of
power among organizations is the control of
the flow of resources, such as money,
physical resources, capital, and human
resources. Institutional theories also recog-
nize the importance of resource flows as a
control mechanism (Meyer & Rowan, 1977;
W. R. Scott, 2001), but resource dependence
theory is not a theory of institutional control:
theories of institutional control focus on
those aspects of a field which regulate behav-
ior on an ongoing basis, and set ‘the rules of
the game’ (Holm, 1995; Lawrence, 1999),
including coercive and resource-based forms
of control, but also including many other
forms of control, such as social and
professional norms, and taken-for-granted
assumptions about the world. Resource
dependence arguments also go beyond
institutional concerns, dealing with any
actor-to-actor relationship shaped by mutual
175
resource interdependence, whether it is an
institutional phenomenon or an ad hoc,
momentary negotiation (Pfeffer & Salancik,
1978). Thus, institutional and resource
dependence theories constitute overlapping
domains of concern rather than competing
explanations; both approaches deal with
resource-based institutional control, but each
also includes other non-overlapping areas of
interest.
Studies of institutional control
Early neo-institutional writing on organiza-
tions, beginning with Meyer and Rowan’s
(1977), and DiMaggio and Powell’s (1983)
classic pieces, focused significantly on insti-
tutional control, but left out an explicit
consideration of power. Meyer and Rowan’s
(1977) discussion of ‘formal structure as
myth and ceremony’ provided a powerful set
of images for understanding the nature of
institutional control. Meyer and Rowan’s
(1977) central argument was that ‘organiza-
tions are driven to incorporate the practices
and procedures defined by prevailing ration-
alized concepts of organizational work and
institutionalized in society’ (Meyer
& Rowan, 1977: 340). Most critical to how
research on institutional control developed is
their idea that organizational environments
are constituted by powerful myths that are
‘highly institutional, and thus in some meas-
ure beyond the discretion of any individual
participant or organization’ (Meyer & Rowan,
1977: 344). DiMaggio and Powell’s (1983)
examination of institutional isomorphism and
collective rationality extended the focus on
compliance with powerful institutions, which
led both to compliance and the homogeniza-
tion of organizational fields. DiMaggio and
Powell’s (1983) three sources of institutional
control – mimetic, normative, coercive – have
become a taken-for-granted feature of institu-
tional theories of organization. Each of these
describes a class of mechanisms which regu-
late the behavior of actors in a field through
social and cultural systems rather than
176 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
through enforcement by a self-interested
actor.
The first stream of empirical research that
emerged out of these theoretical discussions
focused on the diffusion of innovation within
fields, and also largely ignored the role of
power (Baron, Dobbin & Jennings, 1986;
Leblebici, Salancik, Copay & King, 1991;
Mezias & Scarselletta, 1994; Slack
& Hinings, 1994; Strang & Soule, 1998;
Tolbert & Zucker, 1983; Westphal, Gulati
& Shortell, 1997). This work demonstrated
that the adoption of innovations depends sig-
nificantly on the influence of social and cul-
tural systems which reduce uncertainty and
provide legitimacy and other resources to
adopting organizations. The classic institu-
tional argument regarding the diffusion of
innovation has been that, as new practices are
adopted for technical reasons by leading
organizations, the practices gain legitimacy
which spurs adoption by other organizations,
which avoid cognitive uncertainty and
normative sanction by mimicking the early
adopters (Tolbert & Zucker, 1983).
A second stream of work has brought
power more directly into institutional discus-
sions, examining the relationship between
institutions and control in organizations and
inter-organizational networks. This work
connects institutional research to the work of
Foucault and Bourdieu, through its focus on
cultural and social systems that effect institu-
tional control within and across organiza-
tions (Covaleski et al., 1998; Oakes, Townley
& Cooper, 1998; Lawrence et al., 2001;
Townley, 1997; Townley, 2002). Oakes et al.
(1998), for instance, draw on the work of
Bourdieu to examine business planning as a
mechanism of institutional control in a
government department. Central to their
findings is the idea that the effectiveness of
institutional control comes from ‘both redi-
recting work and changing the identity of
producers’; in their case, business plans are
described as a ‘pedagogic practice that can
fundamentally change organizational identi-
ties’ (Oakes et al., 1998: 257). Consistent
with other work in this stream of research,
Oakes et al. (1998) argue that the most effec-
tive forms of power with respect to maintain-
ing institutional control are those which are
associated with little or no visible conflict
(Covaleski et al., 1998; Lawrence et al.,
2001; Townley, 1997).
Power and institutional control
Looking across the theoretical and empirical
writing on institutional control, it is clear that
much of this work has left out any explicit
consideration of power. There is, however,
an image of power that is consistent with,
though often implicit in, this work. Both the
earlier institutional discussions of control
which largely ignored power and the more
recent work that brings it in directly are con-
sistent with a conception of power as vested
in social and cultural systems, rather than in
individual actors. This approach to power is
consistent with recent work in the sociology
of power that describes it as ‘systemic’ –
power that works through routine, ongoing
practices to advantage particular groups
without those groups necessarily establishing
or maintaining those practices (Clegg, 1989;
Foucault, 1977; Laclau & Mouffe, 1985).
These forms of power tend to work in an
ongoing, prosaic fashion that are often not
apparent as forms of power (Covaleski et al.,
1998; Townley, 1993). Understanding power
as potentially systemic is not intended to
attribute ‘will’ or ‘agency’ to systems (social
or technological), but rather to break any
simple association between agency and
power (Clegg, 1989; Foucault, 1977). From
an institutional perspective, it seems impor-
tant to embrace a definition of power that
recognizes the power of the courts, profes-
sional associations, language, and social
customs, as well as the actors that occupy
roles within these structures and who enact
these routines. Indeed, a cornerstone of an
institutional perspective is the idea that
actors are subject to forms of power that are
disconnected from the interests and actions
of specific others (Meyer & Rowan, 1977).
 POWER, INSTITUTIONS AND ORGANIZATIONS
When considering systemic forms of
power, it is useful to differentiate between
two major forms, one of which has received
attention in the institutional literature, and
one which has largely been ignored. The con-
cept of power that is most closely connected
to studies of institutional control is
Foucault’s (1977) notion of discipline;
although not explicitly evoked in most insti-
tutional research, the idea of power exerc
ised through mundane practices that revolve
significantly around the constitution of iden-
tity is core to much, and especially recent,
writing on institutional control (Oakes et al.,
1998; Thornton & Ocasio, 1999). Discipline
as a form of power involves an ongoing,
systemic engagement with the target of
power, and relies on the agency of that target
to have an effect (Clegg, 1989; Covaleski et
al., 1998; Jacques, 1995; Knights & Wilmott,
1989). Discipline works through the
micro-techniques, practices and procedures
of everyday life (Sewell, 1998; Sewell &
Wilkinson, 1992; Townley, 1993), and conse-
quently is often overlooked as a form of
power in organizations. An aspect of disci-
pline that is critical for its role as a basis for
institutional control is its capacity to provide
a basis for agency through the formation of
identity (Knights & Wilmott, 1989).
Discipline is concerned with shaping the
actual formation of the subject, such that:
‘subjects come to recognize themselves as
discrete and autonomous individuals whose
sense of a clear identity is sustained through
participation in social practices which are a
condition and consequence of the exercise of
power’ (Knights & Wilmott, 1989: 538).
Thus, disciplinary practices involve a form of
power that can be understood as positive in
its provision of identity and motivation to
organizational actors (Foucault, 1984).
A wonderful example of discipline as a
basis for institutional control comes from its
use in the Ford Motor Company in the early
20th century, as recounted in Stephen Meyer
III’s (1981), The Five Dollar Day. Although
Henry Ford ran the Ford Motor Company
and was responsible for many of its effects,
177
he was particularly aware of the need to
embed power in institutions which could
control the behavior of employees (and
others) without direct episodes of managerial
agency. The Ford Motor Company’s use of
discipline as a means of institutional control
stemmed from the problems it was facing
with respect to its employees that were cre-
ated in part by the assembly line technology.
In 1914, the company’s annual turnover rate
was 416 percent and daily absenteeism ran
between 10 percent and 20 percent. In
response, Ford established another corporate
institution, when it launched the ‘Five Dollar
Day’ – a profit-sharing plan that would apply
to 90 percent of its workforce, a plan so out
of the ordinary that the Wall Street Journal
accused Ford of promoting socialism. A cen-
tral aspect of the program was the set of con-
ditions that dictated who was eligible to
benefit from it. Ford would only
provide the profit sharing to those it deemed
to be living a moral life, including ‘every
male employee over 22 years of age who
leads a clean, sober and industrious life, and
who can prove he has thrifty habits’, and
‘[a]ll women employed by the company who
are deserving and who have some relatives
solely dependent upon them for support’.
Alongside these rules, Ford established a
Sociological Department, which investigated
the home lives of Ford workers in order to
ascertain eligibility, and actively intervened
with training and advice intended to lift stan-
dards of morality and living conditions.
The Sociological Department focused partic-
ularly on Ford’s newly immigrated workers,
who, as Henry Ford expressed, ‘must be
taught American ways, the English language,
and the right way to live’. To that end, com-
pulsory courses at the Ford English School
included, ‘industry and efficiency’, ‘thrift
and economy’, ‘domestic relations’, and
‘community relations’.
Although disciplinary power is an impor-
tant and pervasive mechanism underpinning
institutions, other important forms of
systemic power have been largely overlooked
in institutional studies of organization.
178 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
In particular, institutional research has
tended to ignore systemic power that works
by altering the range of options available to
actors – a form of power I describe as domi-
nation2 (Lawrence et al., 2001). This form of
power can be embedded in a wide variety of
social systems including material technolo-
gies (Noble, 1984; Shaiken, 1984), informa-
tion systems, and actuarial practices (Simon,
1988). In the context of institutional control,
systems of domination often take the form of
physical and social technologies that provide
the context for action. The physical layouts
of office building, factories and universities,
for example, institutionalize particular pat-
terns of interaction among workers, and are
often overlooked as political mechanisms
(Brown, Lawrence & Robinson, 2005).
Winner’s (1986) examination of the politics
of artifacts examines numerous instances of
this, with the most famous being the many
overpasses on Long Island, New York, which
are so low that they do not permit 12-foot
high public buses to use the parkways over
which those overpasses go. Winner (1986:
23) argues that this effect is not happen-
stance, but rather that it was an intentional
control strategy of Robert Moses, the chief
architect of New York public works from the
1920s to the 1970s. Winner argues that
Moses specified the overpasses in this way
because: ‘Poor people and blacks, who nor-
mally used public transit were kept off the
roads because the twelve-foot tall buses
could not handle the overpasses’ and were
consequently limited in their access to ‘Jones
Beach, Moses’ widely acclaimed public
park’ (Winner, 1986: 23).
A more subtle form of institutional control
through domination is that which is embed-
ded in systems that restrict the effects of
action, rather than restrict action itself, as
illustrated by a wide range of actuarial
practices. Actuarial practices involve the
use of statistics to represent the characteris-
tics of a population, including the use of
standardized tests of intelligence, aptitude or
personality, the construction of probability
tables reflecting life expectancies and
other life chances, and the definition of
demographic categories (Simon, 1988).
While these familiar practices seem
relatively banal and benign, they repre-
sent a significant shift in the production
and structuring of power relations in
societies:
Through the lens of representations thrown off by
these practices, individuals, once understood as
moral or rational actors, are increasingly
understood as locations in actuarial tables of
variations. This shift from moral agent to actuarial
subject marks a change in the way power is exer-
cised on individuals by the state and other large
organizations. Where power once sought to
manipulate the choice of rational actors, it
now seeks to predict behavior and situate sub-
jects according to the risks they pose. (Simon,
1988: 772)
Thus, actuarial practices involve a form of
restrictive institutional control in which the
lives of individuals are transformed, not
through their own actions, but through their
placement in a social order abstracted from
their lived experiences.
Although discipline and domination both
work though routine practices and systems,
there is a critical difference between the two.
Whereas disciplinary practices involve
‘knowing’ the individual through regimes of
surveillance and training (Foucault, 1977;
Townley, 1993), systems of domination work
by ‘knowing’ the population. Disciplinary
mechanisms of surveillance, normalization
and examination all work to construct an
image of the ‘normal’ subject in any defined
social space, move actors toward uniformity
and punish deviants. In contrast, systems of
domination ‘map out the distribution and
arrange strategies to maximize efficiency of
the population as it stands’ (Simon, 1988).
While the disciplinary practices replaced
techniques of coercion and intimidation that
were less precise and engendered overt
conflict (Clegg, 1989; Foucault, 1977),
systems of domination draw on our knowl-
edge of populations to extend this process
even further, constructing even more precise
systems of institutional control which
engender even less overt conflict.
 POWER, INSTITUTIONS AND ORGANIZATIONS
Resisting institutional control
Studies of resistance in the social sciences
are not rare. They tend, however, to focus on
either resistance to broad, societal norms and
values (Kirsch, 2000), or on resistance to
managerial control in organizations (Jermier,
Knights & Nord, 1994). Much less studied is
the resistance of individuals and organiza-
tions to field-level rules, norms, and beliefs.
In this chapter, I adopt Barbalet’s (1985: 531)
position, that ‘resistance imposes limits on
power. Indeed, it is through its limitations on
power that resistance contributes to the
outcome of power relations’. Thus, institu-
tional resistance is understood as the work of
actors to impose limits on institutional
control and institutional agency.
The first prominent recognition of institu-
tional resistance is in Oliver’s (1991) discus-
sion of the wide range of potential responses
to institutional pressures in which actors
might engage: ‘organizational responses [to
institutional pressures] will vary from con-
forming to resistant, from impotent to influ-
ential, and from habitual to opportunistic’
(Oliver, 1991: 151). Oliver argues that actors
potentially respond to institutional pressures
with five basic strategies that range from the
most passive to the most active: ‘acquiesce’,
‘compromise’, ‘avoid’, ‘defy’, and ‘manipu-
late’. All but the end points of this set involve
attempting to impose limits on institutional
control and thus constitute forms of institu-
tional resistance. Despite Oliver’s (1991)
clear and influential statement regarding the
importance of institutional resistance, it has
remained the most neglected aspect of
institutional politics. The ‘acquiesce’ strat-
egy has been the dominant response
described in studies of institutional control
(e.g., Hinings & Greenwood, 1988; Tolbert
& Zucker, 1983); and the ‘manipulate’
strategy has been the focus of research on
institutional agency (e.g. DiMaggio, 1988;
Garud et al., 2002; Maguire et al., 2004).
There is, however, a relative dearth of
research on the ‘middle ground’ strategies of
‘compromise’, ‘avoid’ and ‘defy’. In the
179
remainder of this section, I explore this
middle ground first in relation to the
potential for institutional resistance to
discipline and then to domination.
Resisting discipline
Just as different forms of institutional control
are associated with distinct dynamics and
effects, they are also associated with differ-
ent forms of resistance. When looking at
resistance to discipline as a form of institu-
tional control, space for potential resistance
strategies is opened up by two key require-
ments of discipline: enclosure and surveil-
lance. A key aspect of disciplinary systems is
that they are ‘inward’ looking: discipline
works through routine practices and struc-
tures that shape the choices of actors by
establishing boundaries of appropriate and
inappropriate behavior, but only for actors
who understand themselves as members of
the community, society or field within which
those norms apply (DiMaggio & Powell,
1983; Douglas, 1986). In the Ford example,
the Sociological Department developed pow-
erful systems and routines that shaped the
identities and actions of Ford employees, but
for the most part it only affected Ford
employees (and perhaps their families), and
in fact only those who were both eligible for
and desirous of the Five Dollar Day. So, to
the extent that Ford employees were profes-
sionally mobile (based on skills or family
connections), they would have been able to
avoid or deny the control of the Five Dollar
Day and its associated disciplining systems.
A second requirement of discipline is con-
tinuous surveillance or members’ perceptions
of continuous surveillance (Barker, 1993;
Sewell, 1998). The range of forms and
intensities of surveillance associated with
institutions is wide, but consistent across the
range is the potential for noncompliance to
be registered by systems which will automat-
ically punish, shame, embarrass, or penalize.
In describing the role of surveillance in the
historical development of discipline,
Foucault (1977: 175) argues that, as large
factories developed, it became ‘a decisive
180 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
economic operator both as an internal part of
the production machinery and as a specific
mechanism in the disciplinary power’. The
importance of surveillance in effecting
institutional control has only become more
important and more effective since the indus-
trial revolution described by Foucault. As
Sewell (1988: 401) argues,
New technology has enabled the erection of a sur-
veillance superstructure throughout society that
unobtrusively influences almost all aspects of daily
life, especially work life. … The impact of this
surveillance, especially its ability to instill a pro-
found sense of self-discipline and self-control in
many social settings, is so subtle that it often goes
unnoticed.
Sewell’s argument notwithstanding, sur-
veillance cannot be taken for granted in sys-
tems of institutional control. It must be
effected in some manner, and to the degree
that actors can avoid or ignore it, institutional
control will be undermined. An example of
this dynamic and the potential for institu-
tional resistance it raises comes from Fox-
Wolfgramm, Boal and Hunt’s (1998)
examination of the reaction of two West
Texas banks with distinct strategic orienta-
tions (one defender, one prospector) to new
regulation, which demanded the banks not
‘discriminate against any so-called red-lined
areas considered high risk in terms of loan
repayment’ (Fox-Wolfgramm et al., 1998:
91). Both banks resisted the institutional
pressure associated with the new law, but in
different ways and seemingly with distinct
motivations. Fox-Wolfgramm et al. (1998)
argue that the defender bank initially
engaged in ‘identity resistance’ – an attempt
to ignore the new regulation, operating on a
‘business as usual’ basis, because of a lack of
congruence between the regulation and the
bank’s current and envisioned identity and
image. The bank resisted by adopting a strat-
egy of ‘minimal technical compliance’, so
that ‘the bank complied with the letter of the
law’, spending ‘minimal time and effort’
(Fox-Wolfgramm et al., 1998: 104).
Although the bank then moved some way
toward accepting and implementing the new
regulations, it reverted to old routines once it
had passed the regulatory inspection associ-
ated with the new laws. The prospector bank
also initially resisted the new regulation,
again minimally complying with the letter of
the law, and largely carrying on with busi-
ness as usual. The motivation for this resist-
ance, however, differed significantly from
that of the defender bank: in the case of the
prospector bank, it ‘seemed to resist change
because top management believed that the
bank was already fulfilling institutional
expectations consistent with its “first to lead
the way” identity and thus did not think
change was needed’ (Fox-Wolfgramm et al.,
1998: 117). The prospector bank’s approach
to the legislation changed significantly, how-
ever, when it failed a formal test of its com-
pliance: ‘management interpreted the
examination performance as an indication of
identity and image incongruence … [and]
responded by internalizing the changes
needed to pass the test and incorporating
these into [the bank’s] ideology, strategy and
other organizational and issue aspects of
its “community leadership” so as to be
isomorphic with institutional forces’
(Fox-Wolfgramm et al., 1998: 120).
The resistance of the banks described by
Fox-Wolfgramm et al. (1998) illustrates the
limits of surveillance in many institutional
systems, and especially those which are
highly distributed and involve large
numbers of actors. In this case, managers in
both banks were able to simply avoid making
any substantive changes in their operations
for significant time periods with no signifi-
cant repercussions, largely because the
processes through which compliance was
monitored occurred only periodically and
with substantial prior warning.
Resisting domination
Resistance to domination has distinctly
different dynamics than does resistance to
discipline. These differences stem from the
differential effects of discipline and domina-
tion on actors, and particularly groups of
actors. When systems of domination are
 POWER, INSTITUTIONS AND ORGANIZATIONS
effective, the potential for actors to resist, at
least directly, may be significantly reduced in
comparison to disciplinary systems. Taking
actuarial practices as an example illustrates
this dynamic. The most central technique in
the development of actuarial practices is the
classification of the individual within a
population based on some set of relevant
variables. The relevance of these variables is
dependent, however, on the task at hand,
rather than on any phenomenological signifi-
cance for the individuals so classified. The
same is true for physical and technological
infrastructures, which effect power relations
based on ‘objective’ characteristics of popu-
lations, which may or may not connect to
their lived experiences. Simon (1988: 744)
argues that this aspect of actuarial practices
has significant consequences for our politics
and our identities: ‘By placing people in
groups that have no experienced meaning for
their members, and therefore lack the capac-
ity to realize common goals or purposes, …
[people] may be stripped of a certain quality
of belongingness to others that has long
played a role in our culture’. These classifi-
cations provide little basis for political
action, and even potentially work to usurp
the political foundations of existing groups.
Lawrence and Robinson (In press) argue that
an important effect of this dynamic is the
potential to provoke more significant,
destructive resistance, because in contrast to
discipline, it can ‘entail a greater loss of
autonomy, pose more serious threats to orga-
nizational members’ identities, and may be
perceived as less procedurally just.’ Because
direct, assertive resistance is problematic in
reaction to systems of domination, Lawrence
and Robinson (2007) argue that domination
will be associated with relatively severe,
‘deviant’ forms of resistance directed at
organizations or society as a whole, what
Robinson and Bennett (1995) refer to as
‘property deviance’:
The distinctive quality of property deviance is that it
involves what might be described as very harmful
behavior directed at the organization as a whole.
This type of deviance includes such behaviors as
181
theft from the organization, insubordination, inten-
tional mistakes, sabotaging machinery or equip-
ment, whereby the employee seeks to cause harm
to the organization and/or its property.
Institutional resistance to systems of dom-
ination, thus, present a paradox – although
the ability of actors to compromise, avoid,
and defy institutional control based on dom-
ination may be less than it is under systems
of discipline, the resistance that actors
engage in is likely to be more severe, and
potentially more destructive. It may be diffi-
cult to avoid the effects of overpass heights,
but it is possible to vandalize overpasses and
buses. This dynamic is an unexplored one in
institutional studies of organization, but
could be a major issue when trying to
understand the effects and side-effects of
forms of institutional control that might seem
benign to the designers and implementers of
those systems.
INSTITUTIONAL AGENCY
The second role of power in institutional
theory is ‘institutional agency’ – the work of
actors to create, transform, or disrupt institu-
tions. Power and agency have been tied
tightly to each other in organization theory,
and more generally in the social sciences
(Giddens, 1976, 1984). The capacity of
individual and collective actors to attempt to
realize their own interests was centrally
important to the ‘old institutionalism’ (see
Washington, Boal and Davis, Chapter 30 in
this volume), and has re-emerged as an
important focus for institutional research,
particularly with respect to institutional
entrepreneurship and social movements.
Significant findings in this literature include
the importance of relational and discursive
strategies in effecting institutional change
(Garud et al., 2002; Lawrence & Suddaby,
2006; Maguire et al., 2004; Suddaby &
Greenwood, 2006), the impact of field devel-
opment (Greenwood & Suddaby, 2006;
Lawrence & Phillips, 2004; Maguire et al.,
182 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
2004; Munir & Phillips, 2005), the role of
actors’ identities in effecting their institu-
tional strategies (Fligstein, 1997; Greenwood
et al., 2002; Hensmans, 2003), and the
processes through which practices move
across space and time (Boxenbaum &
Battilana, 2005; Czarniawska & Joerges,
1996). Research on both institutional
entrepreneurship and social movements is
reviewed in other chapters in this
volume (see Chapters 7 and and 27,
respectively), and so I briefly summarize the
broad contours of this work and then
focus on the role of power in institutional
agency.
Studies of institutional agency –
institutional entrepreneurship
and social movements
The concept of institutional entrepreneurship
(DiMaggio, 1988; Eisenstadt, 1980) describes
the process through which new institutions
are created when ‘organized actors with suf-
ficient resources (institutional entrepreneurs)
see in them an opportunity to realize interests
that they value highly’ (DiMaggio, 1988: 14).
Power in this stream of research is tied to the
ability of actors to create new institutions,
through the mobilization of resources. This
work has examined the processes and prac-
tices associated with the creation of practices
(Boxenbaum, 2006; Lawrence, 1999; Munir
& Phillips, 2005), technologies (Aldrich &
Fiol, 1994; Hargadon & Douglas, 2001;
Leblebici, Salancik, Copay & King, 1991),
and forms of organizing (Greenwood,
Suddaby & Hinings, 2002; Suddaby &
Greenwood, 2005) that go against the institu-
tional norms or rules within which they are
embedded. Research on institutional
entrepreneurship has shown that actors effect
institutional agency in a broad set of ways,
including technical and market leadership,
lobbying for regulatory change and discur-
sive action (Fligstein, 1997; Garud, Jain &
Kumaraswamy, 2002; Hoffman, 1999;
Maguire et al., 2004).
Research on social movements has many
similarities to the work on institutional entre-
preneurship, particularly in their shared
focus on the role of agents in effecting
changes in institutional arrangements, and a
tendency to examine this role through the
deep analysis of individual cases of institu-
tional agency. What separates the two litera-
tures, however, is their understandings of the
form and the roots of that agency
(Schneiberg & Lounsbury, Chapter 27 this
volume). Whereas institutional agency
focuses significantly on the traits, strategies
and positions of individual actors (Battilana,
2006; Maguire et al., 2004), social
movements research highlights the role of
collective action motivated by structural
inequalities (Clemens, 1993; McAdam,
1988). The strategies that each literature
highlights differ in ways that reflect their
emphasis on individual versus collective
action. While institutional entrepreneurship
research highlights strategies focused specif-
ically on institutional rules (Garud et al.,
2001; Greenwood & Suddaby, 2006;
Lawrence, 1999; Maguire et al., 2004),
research on social movements focuses on
strategies aimed at fostering and leveraging
collective action, such as framing (Snow &
Benford, 1988; Snow, Rochford, Worden &
Benford, 1986) and resource mobilization
(Jenkins, 1983; McCarthy & Zald, 1977).
What is common across studies of institu-
tional entrepreneurship and social move-
ments is a concern for how interested actors
work to affect the institutions and fields that
provide the institutional context within
which they operate. More clearly than in the
case of institutional control, the study of
institutional agency is the study of a set of
political processes and practices in which
power in many forms is necessarily and obvi-
ously implicated.
Power and institutional agency
Most research and writing on institutional
agency is explicitly political in its accounts
 POWER, INSTITUTIONS AND ORGANIZATIONS
of how actors create, transform and disrupt
institutions (Beckert, 1999; DiMaggio, 1988;
Hensmans, 2003). The dominant image of
power in this work is as an ‘episodic’ phe-
nomenon, constituted in relatively discrete,
strategic acts of mobilization initiated by
self-interested actors (Clegg, 1989).
Research on institutional entrepreneurship
and social movements both describe actors
mobilizing resources, engaging in institu-
tional contests over meanings and practices,
developing, supporting or attacking forms of
discourse and practice – all practices involv-
ing discrete, strategic acts of mobilization.
Similar to institutional control, however,
research on institutional agency has
maintained a relatively narrow focus with
respect to forms of power, in this case
focusing primarily on influence.
Influence is typically described as the abil-
ity of one actor to persuade another actor to
do something they would not otherwise do
(Clegg, 1989; French & Raven, 1959; Lukes,
1974). It potentially involves a wide range of
tactics, including moral suasion, negotiation,
rational persuasion, ingratiation, and
exchange (Clegg, 1989; Lawrence et al.,
2001; Maslyn, Farmer & Fedor, 1996). The
literatures on institutional entrepreneurship
and social movements provide numerous
examples of influence as a basis for institu-
tional agency. Fligstein’s (1997: 398) essay
on the importance of social skills in institu-
tional entrepreneurship, for example,
positions influence as central to institutional
entrepreneurship, which, as a form of ‘skilled
social action’, ‘revolves around finding and
maintaining a collective identity of a set of
social groups and the effort to shape and
meet the interests of those groups’. Fligstein
goes on to articulate a list of tactics available
to ‘strategic actors’, most of which are
examples of either influence or establishing
conditions under which influence is possi-
ble: ‘agenda setting’, ‘framing action’,
‘wheeling and annealing’, ‘brokering’,
‘asking for more, settling for less’, ‘main-
taining goallessness and selflessness’,
‘maintaining ambiguity’, ‘aggregating
183
interests’, ‘trying five things to get one’,
‘convincing people one holds more cards
than one does’, ‘making others think they are
in control’, and ‘networking to outliers’.
Fligstein (1997: 403) goes on to argue that
the use of these influence tactics will depend
significantly on how ‘organized’ the fields
are in which they operate. He argues that:
When fields are less organized, their tactics are to
bring together disparate groups in a large number
of ways. As a frame begins to cohere to organize
the field, they act to propagate that frame and the
social order it implies. Once in place, skilled strate-
gic actors defend a status quo by deftly manipulat-
ing accepted meanings and making sure that the
‘goods’ are being delivered to those who domi-
nate the organizational field. Under situations of
crisis, actors committed to the status quo will con-
tinue to try to use dominant understandings to
structure action as long as they can. Skilled strate-
gic actors in challenger groups will offer new
cultural frames and rules to reorganize the field.
Studies of institutional entrepreneurship
(e.g., Garud et al., 2002; Maguire et al.,
2004) have demonstrated the importance of
influence tactics similar to, or a subset of,
those delineated by Fligstein (1997).
Moreover, the issue of field development has
become an important theme in examining
different forms of institutional agency and
the question of what kinds of actors will
engage in such action (Greenwood &
Suddaby, 2006; Lawrence & Phillips, 2004;
Maguire et al., 2004).
The study of institutional agency has main-
tained a relatively narrow focus in terms of
the forms of power it examines, particularly
overlooking the use of force, which works by
directly overcoming another actor’s inten-
tions or behavior (French & Raven, 1959;
Lukes, 1974). The legitimate use of physical
force is generally restricted by communities
and societies to specific agencies, such as
prisons, psychiatric hospitals, the military and
police forces. Other organizations, however,
also use what might be described as ‘bureau-
cratic force’ on a regular basis: corporations
fire employees; bars forcibly remove disrup-
tive patrons; schools confiscate contraband
substances; universities expel poorly
184 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
performing students; and editors reject the
submissions of aspiring authors.
The use of force, and especially of physi-
cal force, is perhaps the most under-exam-
ined aspect of institutional politics in the
organizational literature. Although explicit
physical force may be relatively rare in many
of the institutional settings we study, this
may be more of a reflection of the con-
strained empirical focus we have adopted in
organization studies than the relative impor-
tance of force in creating, maintaining and
disrupting institutions. If we consider institu-
tional change from an historical perspective,
it is clear that force has been a critically
important means by which states and state
institutions have been created, maintained
and disrupted (Mann, 1993), and not only in
the past (Mann, 2003). In a broad array of
institutional arenas, including healthcare,
education, and more obviously policing and
the prison system, the use of force by the
state or state-sanctioned agencies maintains
many contemporary institutions.
The use of force as a basis for institutional
agency is associated both with attempts to
disrupt institutionalized practices and with
attempts to maintain institutions. Disrupting
institutions through force is most vividly
associated with protests in which protestors
attempt to shut down some kind of institu-
tionalized activity by making it impossible
for it to proceed. Perhaps the most famous
recent example of the use of force to both
disrupt and maintain institutional arrange-
ments was in the ‘Battle of Seattle’ that
occurred around the 1999 World Trade
Organization (WTO) meetings in Seattle,
Washington.3 On November 30, 1999,
Seattle was meant to host the WTO talks that
would involve representatives from the
Western industrialized countries, including a
visit from then President Clinton, the Asian
industrialized countries, and, for the first
time, developing countries in the South. In
response to these meetings, tens of thousands
of protestors, representing a diverse set of
interests including labour, the environment,
the arts, and anti-poverty groups, converged
on Seattle. The protestors were effectively
organized into two main factions. The first,
and largest group was the ‘paraders’, who
were organized primarily by the AFL-CIO,
and whose intention was to mount a large
march to draw attention to their concerns.
The second group, the Direct Action
Network (DAN), was an alliance of groups
including the Rainforest Action Network, Art
& Revolution, and the Ruckus Society,
whose aim was to ‘shut down the WTO’. The
main strategy of the DAN was to take over
key intersections, making it impossible for
delegates to reach the convention centre
where the WTO talks were to be held. Early
in the morning on the first day of the talks,
groups of protesters lock[ed] themselves together
with bicycle locks or tubes, covering their linked
arms to prevent police from removing them indi-
vidually. By 8 a.m., most of the key intersections
had been seized by the protesters, now reinforced
by their second wave.
The next three days saw a range of force
and influence tactics used by protestors and
law enforcement agencies. By 10 a.m. on the
first morning, police were using tear gas, and
then later rubber and wooden bullets, pepper
spray, and mass arrests to try to disperse the
protestors. For their part, protestors relied
primarily on non-violent, passive forms of
resistance, using their numbers to overwhelm
police. From the protestors’ perspective,
however, their key use of force was in terms
of their effect not on police agencies, but on
the WTO and its delegates: at 1pm on the
first day, the WTO cancelled its opening
ceremonies, and ultimately cancelled the
talks completely. The strategy of the DAN
protestors in this respect was to make it
impossible for the WTO to proceed, in par-
ticular by controlling Seattle streets and thus
forcing WTO delegates to stay at their hotels
rather than proceed to the convention centre.
Resisting institutional agency
Resistance to institutional agency involves
reaching compromises with institutional
 POWER, INSTITUTIONS AND ORGANIZATIONS
agents, avoiding their gaze or their ability to
punish non-compliance, or defying their
aims. Although its basic nature is similar to
resistance to institutional control, the flux
and uncertainty that is tied to institutional
agency opens up more room for resistance,
and more potential for creativity in effecting
forms of resistance. Dirsmith, Heian and
Covaleski (1997) provide a detailed descrip-
tion of resistance to institutional agency in
their study of forms of control in the Big Six
accounting firms. This study focused on the
attempt by large, professional accounting
firms to shift internal power relations by
importing ‘a legitimated form of formal orga-
nizational practice, Management by objec-
tives (MBO) … in the hope of legitimating the
actual application of control to the firm’s pro-
fessional cadre’ (Dirsmith et al., 1997: 20).
Dirsmith et al. (1997: 20) argue that the use of
MBO as a tool is important because it repre-
sents a ‘familiar, abstract, objective, procedu-
ralized, client-sanctioned form of control’ and
thus challenges traditional, professional
autonomy based on a discourse of ‘business
focus’ and ‘meritocracy’. Institutional resist-
ance, in this case, emerged from the profes-
sionals in the firms who recognized MBO as a
political tool, rather than a neutral technology.
Interestingly, resistance did not involve direct
refusal, but rather an indirect subversion of the
aims and effects of MBO through the use of
mentor relationships:
mentors recognized MBO for the political as
opposed to instrumental practice it was, and trans-
formed it into a means for advocating for their
protégés, by enabling them to game the formal
system, as in partnership proposal orchestration
to display the ‘right numbers’. (Dirsmith et al.,
1997: 21)
This study highlights the need for both
resources and skills in effecting institutional
resistance. The mentors who helped their
protégés game the MBO system had access
to the information necessary to know when
and how to manipulate the MBO system, and
held senior enough positions in their
firms that their subversions would likely go
unpunished.
185
In the remainder of this section, I explore
the issue of resistance to institutional agency,
focusing first on institutional resistance to
influence and then on institutional resistance
to force. As with institutional resistance in
response to institutional control, the different
forms of power that might underpin
institutional agency engender different possi-
bilities for resistance, and different resistance
strategies.
Resisting influence
The potential for resistance to institutional
agency based on influence stems signifi-
cantly from the uncertainty and complexity
of attempts to create or transform institu-
tional arrangements. Attempts to create,
maintain or disrupt institutions through influ-
ence are fraught with unintended conse-
quences. These stem from the often indirect
nature of institutional agency, as actors affect
institutions by, for instance, working through
third parties such as the state or professional
bodies (Orssatto, den Hond & Clegg, 2002;
Russo, 2001), or developing (or delegitimat-
ing) vocabularies of action and belief which
are only effective to the extent that they are
picked up and adopted by others (Angus,
1993; Lawrence & Suddaby, 2006).
Unintended consequences also result from
the intersection of multiple organizational
fields and sets of institutional arrangements
(Phillips et al., 2004).
Dirsmith et al.’s (1997) study of resistance
to the implementation of MBO in accounting
firms illustrates these dynamics. First, the
MBO system that senior management
attempted to implement in the accounting
firms provides a good example of a complex,
multi-party system in which the sponsors of
the innovation are significantly dependent on
a range of other parties if it is to be success-
fully implemented and institutionalized.
Such situations invite the possibility of
resistance from others who perceive these
new systems as not serving their interests. In
this case, resistance came significantly from
186 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
professionals in the firm who saw the intro-
duction of MBO as an opportunity to
advance their own interests and resist the
aims of the system sponsors. The resistance
evidenced in this case also hinged on the
interaction of MBO with an existing institu-
tion – mentoring – in the firms. The institu-
tionalized positions and practices associated
with mentoring provided both the motivation
and the means for actors to compromise the
newly implemented MBO system: the men-
toring process provided a set of interests to
actors that were in conflict with the MBO
system, and became the tool through which
professionals gamed the new system. I
describe this as an example of institutional
resistance, rather than institutional agency,
because it seems that the accountants who
were gaming the system were not so much
attempting to either create or disrupt an
organizational institution, as compromise
and avoid its effects on themselves and those
who they supported through mentorship
programs.
More generally, the reliance of institu-
tional agency on third parties and its situation
within overlapping fields and institutions
provides the foundation for a range of strate-
gies for institutional resistance. The prob-
lems of surveillance associated with reliance
on third parties opens up space for avoidance
by institutional actors. Influence depends on
the ability of one actor to observe the degree
of compliance of another (Pfeffer, 1981;
Pfeffer & Salancik, 1978), and so working
through the state or other third-party to effect
institutional change or maintain a set of
institutional arrangements may necessitate
developing some complex scheme for sur-
veillance. The involvement of third parties
also invites the possibility of co-optation
where targeted actors are able to influence
the actions of the third-parties and thus
undermine institutional agency. Social move-
ment organizations, for instance, often
attempt to transform institutional arrange-
ments by influencing the state, which might
in turn enact new legislation or enforce exist-
ing laws and rules (Benford & Snow, 2000).
These attempts, however, can lead to resist-
ance on the part of targeted actors, and result
in framing contests in which each party
attempts to convince the state agencies of the
greater legitimacy of their own claims.
A range of institutional resistance strategies
is also connected to the webs of organiza-
tional fields and institutions within which
institutional agency occurs. These webs
provide space for targeted actors to reposi-
tion themselves when institutional pressures
change.
Resisting force
While institutional agency based on influ-
ence engenders resistance because of its
attendant uncertainty and complexity, I argue
that the use of force as a basis for institu-
tional agency has its own distinctive effects
on institutional resistance. The nature of
institutional resistance to force as a basis for
institutional agency stems from the reaction
that force can tend to engender in its targets.
The use of force treats the targets of power as
‘objects’ in the sense that the exercise of
power is not dependent on the agency or
potential agency of targets (Lawrence et al.,
2001; J. Scott, 2001). Unlike influence, the
use of force does not shape the will of the
target, but rather achieves its ends despite
that will. Such forms of power, I argue, tend
to lead to greater resistance on the part
of targets, because they ‘entail a greater loss
of autonomy, pose more serious threats to
[actors’] identities, and may be perceived
as less procedurally just’ (Lawrence
& Robinson, 2007). Moreover, unlike
systems of domination, which also treat tar-
gets as objects, the episodic nature of force
means that it is easily associated with spe-
cific agents, at whom the resistance will
likely be directed. This is because targets of
force tend to aim their resistance at the per-
ceived source of the harms that they perceive
themselves as suffering (Berkowitz, 1993;
O’Leary-Kelly, Griffin & Glew, 1996). The
resistance that the use of force tends to
engender may limit its potential as an effec-
tive tool for institutional agency, both
 POWER, INSTITUTIONS AND ORGANIZATIONS
because targeted actors will attempt to
compromise, avoid or defy the aims associ-
ated with its use, and, even when direct
resistance is difficult, they will tend to
quickly revert to previous behaviors
(Lawrence et al., 2001).
STUDYING POWER AND
INSTITUTIONS
The framework I have described here sug-
gests that the institutional politics of an orga-
nizational field can be conceived of in terms
of an interplay of these three concepts. In the
sections above, I have attempted to provide a
set of ideas from the literatures on power
which could inform a more political analysis
of institutions and organizations, focusing
particularly on the forms of systemic and
episodic power that might underpin institu-
tional control and institutional agency, and
on the dynamics of institutional resistance to
each of these forms of power. In this last
section of the chapter, I explore five research
issues that emerge from a consideration of
institutional control, agency and resistance.
The first three focus on making power
explicit in institutional analysis, incorporat-
ing resistance, and attending to overlooked
forms of power including domination and
force. The last two issues focus on extending
the scope of research on institutional politics
to include sets of actors that are currently
missing.
1. Making power explicit
The first direction that I suggest emerges
from the discussion above is to make power
a more explicit element in institutional writ-
ing and research. I believe this would have
immediate consequences for the study of
institutional control and agency. For the
study of institutional control, I believe that
the explicit incorporation of power as a cen-
tral concept could help re-energize an area
187
that has fallen into relative disregard.
Although the controlling effects of institu-
tions was the dominant concern in the early
years of neo-institutional writing (DiMaggio
& Powell, 1983; Meyer & Rowan, 1977),
attention to control has shifted significantly
toward a focus on the limits of control that
emerge from the existence of competing
logics and overlapping organizational fields
(Rao, Monin & Durand, 2003; Thornton &
Ocasio, 1999). This shift suggests to me a
certain complacency with respect to institu-
tional scholars’ understanding of institutional
control – it is as if we understand how insti-
tutions control organizational actors and so
have let go of that question to a significant
degree. The work of scholars such as
Foucault and Winner (and many others) on
discipline, domination and other forms of
systemic power suggests otherwise; it sug-
gests that the problem of institutional control
is far more complex than current institutional
theories can address, and that many of the
important details of how institutional control
occurs remain to be worked out. A starting
point for such work would be the develop-
ment of empirically grounded analyses of
how discipline and domination support insti-
tutions, how specific instances of those forms
of power work in different contexts, and the
overall limits of their effectiveness.
Making power more explicit in studies of
institutional agency would, I argue, also
provide significant analytical benefits.
Specifically, I suggest that attending more
closely to power in institutional agency and
especially bringing in existing literatures on
influence and force could contribute signifi-
cantly to the development of generalizable,
context spanning theory. Studies of institu-
tional agency have tended to describe the
strategies of institutional agents with idio-
syncratic, study-specific sets of labels (e.g.,
Garud et al., 2002; Greenwood et al., 2002;
Hensmans, 2003; Lawrence, 1999; Maguire
et al., 2004), which make comparisons of the
dynamics and effects of institutional agency
problematic. Incorporating the language of
influence and force could provide a foundation
188 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
for comparing and contrasting institutional
agency in a range of settings.
2. Broadening our conception of
power: attending to domination
and force
The second issue that I suggest could provide
a significant direction for research on institu-
tional politics is the broadening of traditional
conceptions of power that have been relied
upon in the study of institutional control and
agency. Research to date has focused almost
exclusively on forms of power that work by
affecting the process through which actors
perceive and react to the costs and benefits of
various courses of action, by framing those
costs and benefits, by affecting how those
calculations are carried out, or by shifting the
impacts of various actions such that, for
instance, noncompliance with institutional-
ized practices carries with it some significant
cognitive, social or economic costs. Largely
missing from this analysis are systems of
domination and episodes of force that
directly overcome the intentions of actors
rather than trying to affect those intentions.
The lack of attention to domination and
force might arguably be connected to a view
of institutions as primarily cognitive or dis-
cursive phenomena (Lawrence & Phillips,
2004; Phillips et al., 2004), which might
suggest that social practices held in place by
physical or technological systems are not
‘real institutions’ (see Phillips and Malhotra,
Chapter 29 in this volume, for a cogent pres-
entation of this perspective). Such an argu-
ment, however, overlooks the distinctions
between institutions, the mechanisms which
underpin those institutions, and the streams
of action which create them. Phillips et al.
(2004: 638) argue that institutions are best
understood as ‘social constructions
constructed through discourse’ that are asso-
ciated with ‘self-regulating socially
constructed mechanisms that enforce their
application’. Thus far institutional research
has maintained a relatively restricted
understanding of what those socially
constructed mechanisms might involve, with
a distinct focus on ‘social’ systems that rely
on normative and regulative mechanisms to
maintain compliance. I argue that our analy-
sis of those socially constructed institutional
mechanisms needs to expand to include the
built environment including mechanical and
technological systems. Such systems,
whether built from concrete or silicon, are
often a critical element in the institutionaliza-
tion of social practice. Moreover, I argue that
episodes of force are at least as important in
understanding institutional creation and
transformation as the more subtle influence
processes which have dominated research on
institutional entrepreneurship.
Fully incorporating domination and force
into our research on institutions and organi-
zations may require an expansion of both our
conceptual frameworks and our research
methods. Where unwanted physical force has
been examined in organization studies, for
instance, it has largely been understood as
deviant violence (O’Leary-Kelly et al.,
1996). While a deviance perspective high-
lights acts of violence in organizations that
are clearly important and problematic, it also
overlooks a range of phenomena that are core
to understanding force as a foundation for
institutions (Arendt, 1970; Harries-Jenkins &
van Doorn, 1976; Hearn, 1994), including
‘violent’ tactics such as forced injection of
medication or physical restraints in a medical
facility, incarceration and capital punishment
in the penal system, corporal punishment in
the school system, and acts of war by nations
in conflict. Moreover, attending to domina-
tion and force as bases of institutional control
and agency may also be facilitated by several
methodological shifts. Documenting the role
of these forms of power may depend on shift-
ing away from actors’ own accounts of how
institutions are supported or were created,
since domination and force may be
understood by those involved as less socially
desirable than other forms of power.
Understanding the institutional role of domi-
nation may also require detailed analyses and
 POWER, INSTITUTIONS AND ORGANIZATIONS
presentation of the physical and technologi-
cal environment in ways that would be
unusual for an institutional study. Rather
than rely exclusively on interview
quotations, for instance, the presentation of
data might include diagrams of physical lay-
outs, representations of information systems,
and summaries of actuarial categories.
3. Getting real: incorporating
institutional resistance
A second issue for future research on power
and institutions concerns the role of resist-
ance in our theories and descriptions of
empirical situations. I have argued that resist-
ance is a relatively neglected phenomenon in
institutional studies of organization. Studies
of institutional control have tended to focus
on the homogeneity of organizational
responses to institutional pressures, and the
consequent tendency for isomorphism in
organizational fields. Studies of institutional
agency have highlighted the success of indi-
viduals and organizations in their attempts to
transform institutional arrangements. In nei-
ther of these traditions has sufficient atten-
tion been paid to those actors who are able
somehow to compromise, avoid or defy sys-
tems of institutional control or episodes of
interested agency. It seems to me that both
deficiencies may result from a perceived
need on the part of institutional scholars to
demonstrate that the institutional phenomena
they are examining are ‘real’ – that institu-
tions do control actors’ beliefs and behaviors,
or that agents really are capable of creating
or transforming institutions. Highlighting the
limits of institutional control and agency may
have been understood as potentially weaken-
ing those arguments.
In contrast, I argue that the time has come
for institutional scholars to adopt a more bal-
anced approach to their descriptions of insti-
tutional phenomena, demonstrating both
institutional control and the ability of actors
to escape that control, and documenting
strategies for institutional agency as well as
189
the ways in which other individuals and
organizations push back or deflect the
impacts of those strategies. That an institu-
tion does not completely control all of the
actors it touches does not make it less institu-
tional. Attending to resistance brings in the
multiplicity of institutions and institutional
logics that operate in any field. Regulative
frameworks often overlap in their jurisdic-
tions and conflict in their prescriptions.
Moral orders overlap and contradict one
another, often providing room for actors
to ‘choose’ the moral communities within
which they will operate. Even taken-
for-granted beliefs are not usually taken
for granted by everyone, since multiple,
competing sources of meaning usually co-
exist in fields.
Incorporating resistance could, therefore,
be part of an important next step in the evo-
lution of institutional studies of organization.
One thread in the evolution of institutional
theory, at least since Meyer and Rowan’s
(1977) classic statement, has been an
increasing attention to the complexity of
institutional phenomena (W. R. Scott, 2001).
Taking resistance into account could advance
this process significantly, and promote stud-
ies that incorporate the wide variety of
actors’ responses to institutions, as well as the
conditions that make this variety possible –
the competing logics, overlapping fields, and
intermediated institutional pressures which
provide the opportunity for actors to compro-
mise, avoid and defy institutional control and
institutional agency.
4. Where are the janitors and
mechanics in institutional theory?
Attending to the institutional work
of maintaining institutions
A third issue for future research involves a
set of actors who are largely missing from
studies of institutional control. Perhaps the
most distinctive and fundamental element of
an institutional approach to understanding
organizations and organizational life is an
190 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
understanding of behavior and belief as con-
ditioned by enduring structures, practices,
rules, beliefs and norms. Institutionalized
social elements are largely understood as
robust, enduring phenomena which provide
the context for action – the background
against which local politics, negotiations,
and choice occur. What is missing from this
image is a recognition of the work done by
actors in order to maintain institutions as
such (Lawrence & Suddaby, 2006). Zucker
(1988) argues that a key issue in understand-
ing institutions is that even in highly institu-
tionalized arenas, entropy is a natural
tendency that needs to be overcome. W. R.
Scott (2001: 110) argues that ‘most institu-
tional scholars accord little attention to the
issue of institutional persistence’. The per-
spective taken by these authors suggests that
even though systemic power may underpin
institutions, it does not do so without the
ongoing aid of a variety of interested actors.
This is not to revert to a rational actor model
of institutional control, where elites design
and manage social institutions. Instead, I think
it points to the importance of bringing into
institutional analysis the legions of non-elite
actors whose work, and sometimes purpose, it
is to maintain social and organizational
institutions – the institutional janitors and
mechanics who deal with the mess and break-
downs of institutional mechanisms that occur
as an everyday occurrence.
This omission is hinted at by recent work
on competing institutional logics and institu-
tions as mediating political factors (Thornton
& Ocasio, 1999; Bartley & Schneiberg,
2002) that suggests our traditional image of
institutional control may be overly optimistic
with respect to its ability to endure without
significant work on the part of institutional
actors (Lawrence & Suddaby, 2006; Scott,
2001) – who these actors are and what they
do, however, is currently not examined in the
institutional literature. This issue is critical
for understanding the connection between
power and institutions in two ways. First,
an understanding of institutional control that
is missing this perspective provides an
unrealistic account of its politics.
Descriptions of institutional control without
a recognition of the institutional work of
maintaining institutions suggest an overly
stable and deterministic image of organiza-
tional fields – systems of institutional control
would appear to effect stable patterns of
behavior and belief unless they were chal-
lenged either by institutional entrepreneurs
or by competing institutions. Incorporating
the institutional work of maintaining institu-
tions points to the inherent instability of
institutional control mechanisms: systems
of discipline and domination have the ability
to significantly control the behavior and
beliefs of actors, but only to the extent that
they are maintained over time. The second
problem of overlooking the institutional
work of maintaining institutions is that it
excludes from institutional analyses the insti-
tutional roles of the non-elite actors who do
not occupy positions from which they might
create or challenge institutions, but whose
work is essential to maintaining institutional
order. Lawrence and Suddaby (2006) suggest
six categories of institutional work aimed at
maintaining institutions: enabling work that
involves the creating of supportive rules;
policing so that compliance is ensured; deter-
ring through the establishment of coercive
barriers; valorizing and demonizing; creating
and sustaining institutional myths; and
embedding the normative foundations of an
institution into actors’ routine practices.
These practices depend on the active involve-
ment of non-elite actors who do much more
than simply enact institutional control
mechanisms – they creatively and reflexively
work to support institutions and the
mechanisms that underpin them.
5. Institutional side effects: where
are the homeless in our studies?
The final issue I suggest as a future research
direction again concerns a second set of actors
who are missing in traditional studies of insti-
tutions and organizations. All institutions
 POWER, INSTITUTIONS AND ORGANIZATIONS
affect the distribution of power, resources
and risk in the organizational fields they
structure (Bourdieu, 1993; Clegg, 1989;
Douglas & Wildavsky, 1983). This is a cen-
tral tenet of this chapter, and is consistent
with much of the research on institutional
entrepreneurship and social movements that
has informed the study of institutional
agency. Studies of institutional control have
also moved toward recognizing the power
effects of competing logics and institutional
change (Amenta & Halfmann, 2000, 1991;
Bartley & Schneiberg, 2002; Stryker, 2002;
Thornton & Ocasio, 1999). What none of
these studies account for in any detail, how-
ever, are the ‘side effects’ of institutions – the
impacts of institutionalized practices and
structures on the myriad actors who are nei-
ther party to their creation nor are contem-
plated in their design. While it is clear, for
instance, that the institutions that emerge out
of occupational contests (e.g., between
medical doctors and midwives) have a direct
impact on the practitioners of those
occupations, there are a host of other actors,
such as patients and their families, other
medical practitioners, nurses, public health
officers, and health policy makers who are
also affected but whose interests are less
well-attended to institutional research.
Similarly, research on the work of HIV/AIDS
activists and advocates has documented the
significant impacts on the power of doctors,
pharmaceutical companies and HIV/AIDS
community groups (Maguire et al., 2004).
Missing in this analysis, however, is the
impact on HIV+ individuals who were
largely left out of this process, such as
intravenous drug users, as well as its impact
on other individuals living with other
diseases. This example points to the hetero-
geneous nature of institutional side-effects.
Although intravenous drug users were
largely sidelined in the institutional contests
around HIV/AIDS treatments, they later
gained significant discursive resources in
their attempts to construct drug addiction as
health, rather than a criminal, issue.
Similarly, members of other disease groups
191
benefited from the lessons learned in the
HIV/AIDS arena, and from the templates for
action and collaboration that the HIV/AIDS
community forged in their struggles for rapid
access to new treatments and alternative
experimental designs. Others, however, seem
to have fared less well in this institutional
battle. People living with HIV/AIDS in the
developing world, for instance, continue to
suffer without the political resources to effect
institutional change that the community
had access to in the North. Moreover,
research and treatment dollars are a scarce
resource which shifted significantly toward
work on HIV/AIDS potentially incurring sig-
nificant costs to advancement in other
disease areas.
Attending to the ‘homeless’ in institu-
tional research would require a much
widened lens in our research designs and
data collection and analysis strategies, and
could be facilitated by drawing across
boundaries on work focused on issues of
gender, race, age, and class. Research
designs that would be sensitive to the effects
of institutions on marginalized actors would
need to ask broader questions than how did
particular institutions emerge and how do
they control specific groups; instead, they
would need to seek out the consequences of
institutions more broadly in a society,
following the traces of institutional impact
outwards, as well as ‘inverting’ the process
by taking on perspectives well outside of the
assumed fields of influence to try to see the
institutions from the margins. Data collection
and analysis in such a process would need to
be flexible enough to capture unexpected
sets of findings and follow them through to
their natural conclusions, a process that
might be difficult in tightly designed
qualitative or quantitative studies. Attending
to and understanding the side-effects of
institutions might demand a long and deep
engagement in a field, not only observing a
population of organizations, but also
connecting with the individuals, groups
and communities affected by those
organizations.
192 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
CONCLUSION
In this chapter, I explored the intersection of
power, institutions and organizations. I have
argued that this can usefully be done by artic-
ulating the contours of institutional politics –
the interplay of institutional control, agency
and resistance in organizational fields.
Institutional control represents the impact of
institutions on the behaviors and beliefs of
actors. Institutional agency involves the work
of actors to create, transform, maintain and
disrupt institutions. Institutional resistance
describes the work of actors to compromise,
avoid or defy systems of institutional control
and episodes of institutional agency.
Together, these describe the forms of power
in play in organizational fields; their interac-
tion significantly determines the evolution of
institutions, networks and subject positions
that structure the experiences and opportuni-
ties of actors.
There are, of course, other ways in which
the dynamics of power in organizational
fields could be described and analyzed. As I
mentioned in the introduction, a great deal of
work has been done connecting institutions
and power in feminist, critical, post-struc-
turalist and post-colonial traditions. Each of
these approaches provides a distinctive, valu-
able language for understanding the interplay
of power and institutions. In this chapter,
I have attempted to develop a way of looking
at this relationship that fits more closely with
traditional concerns of institutional scholars,
but, in so doing, have obviously replicated
many of the existing boundaries and blinders
of institutional research. The framework
developed here, however, need not be limited
to addressing narrowly defined institutional
concerns. Understanding institutional
control, agency and resistance could provide
a useful foundation for examining issues of
inequality, discrimination or oppression in
organizational fields. This limitation
notwithstanding, the framework developed in
this chapter has potentially important
implications for institutional studies of
organization. In particular, it could provide a
useful tool for helping to re-integrate rela-
tively isolated streams of institutional
research.
At this point in the history of institutional
theory, we are seeing the development of
increasingly isolated streams of inquiry.
Studies of institutional control have evolved
toward more sophisticated, quantitative meth-
ods drawing significantly on ecological
analytical techniques. In contrast, paradig-
matic studies of institutional agency tend to
be longitudinal, qualitative case studies.
Institutional resistance has tended to be
examined primarily as a side issue, with little
systematic theoretical attention or method-
ological development, at least within the
mainstream of institutional theory. Along
with these differences in focus and method
has come a fragmenting of the community of
scholars engaged in institutional work.
Although this may be a ‘natural’ turn in the
evolution of a scholarly area, it also presents
problems in terms of the development of
institutional research which might address
complex social problems that require under-
standings of control and agency, as well as
resistance. Bringing power into institutional
analyses might provide the potential for a
more integrated, coherent approach to under-
standing the institutional dynamics of organi-
zational fields. More specifically, examining
an organizational field in terms of the three
dimensions of institutional politics – control,
agency and resistance – could illuminate a
richer and more complex set of institutional
dynamics than has tended to be the case in
traditional institutional studies, which focus
on only one of those elements. Giving
equal weight to institutional control, agency
and resistance will help to show both the
interplay of these dimensions, and the limits
of each.
NOTES
1 A relational understanding of power is in part
an attempt to avoid the distraction of a physical
 POWER, INSTITUTIONS AND ORGANIZATIONS
metaphor for social power, as established by French
and Raven’s (1959) distinction between power
(capacity) and influence (the use of that capacity).
This distinction provides a problematic foundation for
discussions of power and institutions, since discus-
sions of power easily become conflated with
resources or other sources of power, and the forms
of power become narrowed to those which occur
through influence.
2 Although the concept of domination has a long
and varied history in the social sciences, and has
been used in a wide variety of ways (Arendt, 1958;
Habermas, 1972; Marx, 1906), I use it here to
describe a general category of forms of power. While
the term has been used in reference to ‘false con-
sciousness’ (Jermier, 1985; Marx, 1906), ‘manipula-
tion’ (Clegg, 1975; Lukes, 1974), the overwhelming
use of power, I use it simply to describe forms of
power that support institutional control through sys-
tems that restrict the range of options available to
actors (Lawrence et al., 2001).
3 Data for this example taken from de Armond
(2000), and archived coverage from the Seattle
Times (http://seattletimes.nwsource.com/wto) and
the Seattle Post-Intelligencer (http://seattlep-i.
nwsource.com/wto
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 7
Institutional Entrepreneurship
Cynthia Hardy and Steve Maguire

INTRODUCTION considerations of agency, power and interests

into analyses of institutional fields
(e.g., Powell & DiMaggio, 1991; Greenwood
In this chapter, we review the emerging and
& Hinings, 1996; Hirsch & Lounsbury,
rapidly growing body of organizational
1997). Some work suggests that individual
research on institutional entrepreneurship.
institutional entrepreneurs play highly influ-
This term refers to the ‘activities of actors
ential, if not determining, roles in episodes of
who have an interest in particular institu-
creating and transforming institutional
tional arrangements and who leverage
arrangements. Other writers, however, are
resources to create new institutions or to
more cautious of attributing too much agency
transform existing ones’ (Maguire, Hardy &
or causality to specific actors and have,
Lawrence, 2004: 657); while institutional
instead, emphasized the collective,
entrepreneurs are those actors to whom the
incremental and multi-level elements of
responsibility for new or changed institutions
institutional entrepreneurship as a process,
is attributed. These concepts are most closely
including its unintended consequences. Our
associated with DiMaggio’s (1988: 14) work
purpose in this chapter is, then, to explore
in which he argued that ‘new institutions
different perspectives on the nature, role and
arise when organized actors with sufficient
impact of institutional entrepreneurs, as well
resources (institutional entrepreneurs) see in
as processes of institutional entrepreneurship.
them an opportunity to realize interests that
Underpinning much of the recent interest
they value highly’. Institutional entrepre-
in institutional entrepreneurship (e.g.,
neurs can also work to maintain or to disrupt
Dorado, 2005; Battilana, 2006; Leca &
and tear down institutions, although there is
Naccache, 2006; Garud, Hardy & Maguire,
far less research in these areas as compared
2007) is the paradox of embedded agency
to studies of institution building and
(Powell & DiMaggio, 1991; Friedland &
institutional change (Lawrence & Suddaby,
Alford, 1991; Sewell, 1992; Holm, 1995; Seo
2006).
& Creed, 2002), which raises interesting
The recent growth in the literature on insti-
questions for institutional theorists.
tutional entrepreneurship responds to calls
for institutional theorists to bridge the ‘old’ The theoretical puzzle is as follows: if actors are
and ‘new’ institutionalisms by reintroducing embedded in an institutional field … how are they
 INSTITUTIONAL ENTREPRENEURSHIP
able to envision new practices and then subse-
quently get others to adopt them? Dominant
actors in a given field may have the power to force
change but often lack the motivation; while
peripheral players may have the incentive to create
and champion new practices, but often lack the
power to change institutions (Garud, Hardy &
Maguire, 2007: 961).
First, it is not clear how actors are able to
envision and champion new practices if they
are embedded in an institutional field and
subject to its regulative, normative and cog-
nitive pressures. As Maguire (2007: 674)
points out, ‘actors who are truly embedded’
are not supposed to imagine, desire or realize
alternative ways of doing things ‘because
institutionalized arrangements and practices
structure cognitions, define interests and, in
the limit, produce actors’ identities’. So,
although central, dominant actors may be
able to champion institutional change, they
appear unlikely to come up with novel ideas
or to pursue change because they are deeply
embedded in – and advantaged by – existing
institutional arrangements. Resource-rich
central players are often unable ‘to see
beyond prevailing “recipes” ’; are committed
to existing technologies; are ‘exposed to nor-
mative processes’; and have interests
‘aligned with current practices’ (Greenwood
& Suddaby, 2006: 29; also see DiMaggio &
Powell, 1983; Tushman & Anderson, 1986;
Porac & Thomas, 1990). Second, it is also
unclear how institutional entrepreneurs get
other embedded field members to take up
and institutionalize new practices. Those
actors that are most likely to imagine and
desire change are often located at the periph-
ery – by being less embedded in and less
privileged by existing institutional arrange-
ments, they have more to gain from change
and more ideas for what it might look like
(e.g., Leblebici, Salancik, Copay & King,
1991). However, they are also likely to lack
the power and resources necessary to realize
it (Maguire, 2007). Moreover, even central
actors in mature fields have to work to ensure
that a wide range of other field members
abandon existing practices in favour of the
new ones that they are championing.
199
In this chapter, we explore how research
has sought to answer these and related ques-
tions. We start by considering which types of
actor take on the role of institutional entre-
preneur, reviewing work exploring the attrib-
utes of individual actors as well as the place
they occupy in the field. The second section
describes the field conditions that help to ini-
tiate institutional entrepreneurship – how
particular aspects of an institutional field
provide a context in which ideas for change
can emerge and take hold. In the third section
we consider the role of interpretive struggles
and, specifically, how contests over meaning
are associated with processes of institutional
entrepreneurship. In the fourth section, we
discuss intervention strategies – patterned
action by institutional entrepreneurs as they
seek to change a field. Finally, we provide
some insights on how this body of literature
has developed and the direction it might take
in the future by distinguishing between two
different narratives of institutional entrepre-
neurship. We find that the majority of the lit-
erature has developed around actor-centric
accounts that focus on particular institutional
entrepreneurs, and how and why they are
able to transform fields. However, a different
narrative can also be identified – one that is
process-centric and emphasizes the struggle
that accompanies processes of institutional
entrepreneurship. It is this narrative that, we
feel, offers more promising avenues for
future research in as much as it helps to
ensure that the efforts of institutional theo-
rists to incorporate agency – in order to move
beyond an over-emphasis on the constraining
effects of institutions – do not swing too far
in the opposite direction.
INSTITUTIONAL ENTREPRENEURS
Who can become an institutional entrepre-
neur? Who are the actors who ‘break away
from scripted patterns of behaviour’ (Dorado,
2005: 388) and strive ‘to develop strategies
and shape institutions’ (Lecca & Naccache,
200 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
2006: 627). At a basic level, researchers have
examined different types of actors that initiate
institutional change and act as institutional
entrepreneurs, including: individuals
(Fligstein, 2001b; Kraatz & Moore, 2002;
Lawrence & Phillips 2004; Maguire et al.,
2004; Dew, 2006); organizations (e.g.,
Dejean et al., 2004; Demil & Bensedrine,
2005; Garud et al., 2002; Hensman, 2003;
Leblebici et al., 1991), especially in the
professions (Edelman & Suchman, 1997;
Greenwood et al., 2002; 2005; 2006;
Lounsbury, 2002); networks (Dorado, 2005);
associations (Demil & Bensédrine, 2005);
and social movements (Lounsbury et al.,
2003; Rao 1998; 2002; Rao et al., 2000).
Researchers have, however, explored more
complex questions than whether individuals,
organizations or collectives can act as institu-
tional entrepreneurs; accordingly, we
examine work that has linked institutional
entrepreneurship to properties associated
with particular types of actors, as well as to
specific positions in a given field.
Properties
One approach to understanding who initiates
institutional change focuses explicitly on the
properties – special characteristics, qualities
and abilities – which distinguish institutional
entrepreneurs from others in the field, and
allow them to envision and promote alterna-
tive arrangements. This work sees the institu-
tional entrepreneur as an ‘analytically
distinguished social type who has the capa-
bility to take a reflective position towards
institutionalized practices and can envision
alternative modes of getting things done’
(Beckert, 1999: 786, emphasis in original).
At the level of the individual, the notion
of an institutional entrepreneur thus opens
up avenues of research informed by cog-
nitive psychology and ‘the development
of systematic tools for predicting how indi-
vidual cognition is translated into actions
in the institutional environment’ (George,
Chattopadhyay, Sitkin & Barden, 2006: 348).
Other work has examined the characteris-
tics of institutional entrepreneurs using a dif-
ferent theoretical perspective – critical
realism (Mutch, Delbridge & Ventresca,
2006; Leca & Naccache, 2006). For example,
Mutch (2007) uses Archer’s (2003) work to
study Sir Andrew Barclay Walker, who pio-
neered the practice of directly managed
public houses in England. Mutch (2007)
suggests that Walker was able to act as an
institutional entrepreneur because of his
reflexivity. Specifically, he was an
‘autonomous reflexive’ – an actor who
reflected in relative isolation from the con-
cerns of others, as a result of which he was
more likely to experience conflict with the
structures that surrounded him and, there-
fore, to seek opportunities for change. Leca
& Naccache (2006) use critical realism to
explore the activities of an organization,
rather than an individual – ARESE, the first
company to act as a social rating agency in
France. These authors show how, despite
being embedded, reflexivity allowed this
organization to contribute to the institutional-
ization of Socially Responsible Investment in
that country.
Work in the critical realist tradition, while
focusing on the institutional entrepreneur,
also places considerable emphasis on the
institutional context, reminding us that actors
are products of the institutional fields in
which they operate. Although it has been
argued that many institutional studies tend to
treat the actor, whether individual or organi-
zational, as unproblematic (see the chapter
by Ezzemal & Willmott in this volume), it is
important to remember that actors, interests,
goals and strategies are institutionally, cul-
turally and historically shaped (Friedland &
Alford, 1991; Clemens & Cook, 1999;
Meyer, 2006). Which actors have ‘the right to
have interests, what interests are regarded as
reasonable or appropriate, and what means
can be used to pursue them are all products
of socially constructed rules’, meaning that
‘who has the right to take self-determined
and self interested actions – is expected to
vary over time and place’ (Scott, 1995: 140).
 INSTITUTIONAL ENTREPRENEURSHIP
In order to recognize the mutually constitutive
nature of actors and fields, research has also
focused more directly on the actor’s position
in the field in trying to ascertain who or what
can act as an institutional entrepreneur.
Positions
To focus more attention on how the actor is a
product of the field, researchers have investi-
gated the way in which fields create a limited
number of subject positions (Maguire et al.,
2001) or social positions (Battilana, 2006),
from which actors can take action (Bourdieu,
1990). Subject position refers to those legiti-
mated identities that are available in a field
(Oakes et al., 1998). Power relations among
actors are thus embedded in the field
(Fligstein, 2001b), including the capital or
resources available to different actors, as well
as a sense of the social ‘game’ – what Bourdieu
calls ‘habitus’ (see Everett, 2002). These rela-
tions and resources in turn provide actors with
institutionally defined interests and opportuni-
ties (Bourdieu & Wacquant, 1992) and, in
some cases, with the possibility to exert power
over the field at a particular point in time
(Bourdieu, 1986). Fields are ‘structured sys-
tems of social positions within which struggles
or manouvre take place over resources, stakes
and access’ (Oakes et al., 1998: 260). In other
words, actors do not ‘have’ power; instead,
they occupy (or fail to occupy) subject posi-
tions that allow them to exercise power in –
and on – a particular field. For example,
Maguire et al. (2004), in their study of the
emerging field of HIV/AIDS advocacy in
Canada, found that the institutional entrepre-
neurs were actors who occupied subject posi-
tions that provided them with legitimacy with
respect to diverse stakeholders; and enabled
them to bridge stakeholders in ways which
facilitated access to dispersed resources.
Empirical studies have found that, despite
the paradox of embedded agency, institu-
tional change can be initiated by powerful
actors located in dominant positions in
mature fields. For example, the provincial
201
government in Alberta, Canada imposed
business planning practices on government
departments by fiat (Townley, 2002). Sherer
and Lee (2002) found, in their study of law
firms, that it was the most prestigious ones
that first adopted new personnel practices.
Similarly, it was the largest accounting firms
that (unsuccessfully) promoted the adoption
of multi-divisional form in the Canadian
accounting field (Greenwood et al., 2002;
Greenwood & Suddaby, 2006). In the field of
French cuisine, change in the form of nou-
velle cuisine came from chefs ‘in the centre
of the French culinary world who had
received honors from the French state and
had garnered plaudits from the Guide
Michelin’ (Rao et al., 2003: 804).
Such research has shown even central
actors may not be as embedded in a single
field as strong institutionalist views would
suggest. In fact, they may have access to
alternative practices in other fields through a
variety of mechanisms. For example, many
leading French chefs visited Japan and
obtained new ideas from a completely differ-
ent culinary field to develop nouvelle cuisine
(Rao et al., 2003). Large Danish organiza-
tions introduced American practices of diver-
sity management as a result of the influence
of employees and consultants who had expe-
rience of other fields, including overseas
work and involvement in the feminist move-
ment (Boxenbaum & Battilana, 2005).
Research has also shown that the large, elite
accounting firms which introduced the multi-
divisional form into the field of Canadian
accounting were not as embedded as might
have been thought, given their central loca-
tion in a highly institutionalized mature field.
Greenwood and Suddaby (2006: 40) found
that these firms bridged a number of organi-
zational fields, including those of their global
clients. This ‘boundary bridging’ exposed
them to alternative practices; while their
scope and size meant they were too large to
be effectively regulated by their profession;
and their reliance on in-house training
reduced their exposure to normative
influences.
202 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Research has also shown how institutional
change can also be initiated by less domi-
nant, peripheral actors. For example, despite
the fierce defence of traditional distribution
networks in the American music industry,
‘disruptive challengers’ like Napster were
able to undermine ‘status quo incumbents’
and open up space for new practices
(Hensman, 2003); fringe players initiated
change in the US broadcasting industry by
introducing new practices that were adopted
by dominant players to become conventions
in the field (Leblebici et al., 1991: 345);
while activist organizations, such as environ-
mental NGOs, played an important role in
the institutionalization of recycling practices
(Lounsbury et al., 2003). Compared to dom-
inant actors, peripheral actors are expected to
have less difficulty developing ideas for
change: they are less likely to be connected
to other actors and, therefore, less aware of
institutional norms and practices; and they
are more likely to be exposed to alternative
ideas by being on the periphery of the field
(Suddaby & Greenwood, 2006; Maguire,
2007). They are also likely to be motivated to
bring about change since they are often dis-
advantaged by prevailing arrangements
(Leblebici et al., 1991). The paradox in this
situation is less about how such actors come
up with ideas for change; rather, it relates to
how these peripheral, marginal actors get
other field members to adopt them, as we
discuss in more detail in the section on
intervention strategies below.
In summary, individual and various types
of organized, collective actors can act as
institutional entrepreneurs. Some research
emphasizes institutional entrepreneurs’
unique abilities and features that, in effect,
make them a privileged ‘species’ of actor –
one ‘increasingly endorsed with specific
qualities “normal” actors do not possess’
(Meyer, 2006: 732). Other research seeks to
explain who becomes an institutional entre-
preneur with reference to the position they
occupy in a field. It has been argued that the
latter approach, which seeks to establish an
institutional grounding of the institutional
entrepreneur, is the preferred direction for
future research: the ability of institutional
entrepreneurs to see or create ‘a window of
opportunity’ needs to be considered in rela-
tion to the way in which the field produces
their interests, skills and stocks of knowledge
(Meyer, 2006: 732), as we explore in the next
section.
INITIATING FIELD CONDITIONS
Another line of enquiry concerned with
resolving the paradox of embedded agency
has tried to identify particular field
conditions that create opportunities for insti-
tutional entrepreneurship. We begin this
section by summarizing two approaches that
explore the stimuli that appear to trigger
institutional entrepreneurship: uncertainty as
well as other problems in a field for which
new or changed institutions can serve as
solutions; and tensions and contradictions
that exist, even in highly institutionalized
fields, which provide actors with margins of
manoeuvre and opportunities for creativity.
We conclude with a discussion of how the
state of a particular field can facilitate institu-
tional entrepreneurship.
Stimuli
Some research, especially work that adopts
an economic approach to institution building
and views actors as rational, argues that
uncertainty in a field prompts institutional
change as actors seek to reduce it. Generally
speaking, uncertainty is ‘the degree to which
future states of the world cannot be antici-
pated and accurately predicted’ (Pfeffer &
Salancik (1978: 67) and, in economics, refers
more precisely to situations where actors
cannot define rational strategies because they
cannot calculate probabilities for decision
outcomes (Knights, 1921; Beckert, 1999).
According to this view, institutions, because
they structure and make predictable actors’
 INSTITUTIONAL ENTREPRENEURSHIP
behaviour, are solutions to the problems
faced by cognitively limited actors whose
interdependence with other actors creates the
possibility of opportunistic behaviour and
increased transaction costs (Coase, 1937;
Williamson, 1985; North, 1990). Working in
this tradition, Dew (2006: 16) elaborates the
concept of Coasian-style institutional entre-
preneurship as ‘the activity of initiating,
creating and leading organizations that spe-
cialize in developing institutional frame-
works that lower transaction costs’ for other
actors in the field. He offers the example of a
grocery executive who pioneered the now
widespread and institutionalized technology
standards and associated practices for using
bar codes and universal product codes, to
facilitate exchange relationships.
In this way, institutional entrepreneurship
is associated with solving problems that have
been identified in a field. For example,
adverse performance of the major accounting
firms in Canada called into question the effi-
ciency of the traditional organizational form
in the field, prompting some to adopt a new
multi-divisional form (Greenwood &
Suddaby, 2006). Similarly, the inflexibility of
the Association to Advance Collegiate
Schools of Business (AACSB) model of
business education in light of increasingly
diverse student demands and business school
mandates created ‘ambiguity, scarcity in
legitimizing resources … [and] selection
pressures’ which, in turn, led to moves to
expand the field to include European
business schools (Durand & McGuire, 2005:
184). The rise of socially responsible
investing in France created the problem of
how to measure corporate social perform-
ance, as a result of which institutional entre-
preneurs sought to institutionalize
standardized measures (Dejean, Gond &
Leca, 2004). Once new practices are initially
adopted by some actors, evidence of
their effectiveness, such as positive market
feedback, increases their legitimacy among
other actors and encourages their wider
diffusion and adoption (e.g., Lee &
Pennings, 2002).
203
According to this work, new institutional
arrangements are promoted by actors seeking
to solve problems, such as reducing uncer-
tainty, in their institutional field. One would
therefore expect to see acts of institutional
entrepreneurship correlated with field-level
problems or a high degree of field-level
uncertainty. Interestingly, drawing on
Schumpeter’s notion of an entrepreneur,
Beckert (1999: 783) argues the opposite:
‘strategic agency that violates existing
institutional rules can be expected in situa-
tions characterized by relatively high degrees
of certainty within an institutional field’.
This is because actors, if rational, need to be
able to assign probabilities to the possible
consequences of their choices and to work
out whether change is going to be profitable
or beneficial for them before taking action.
Consequently, this argument suggests that
uncertainty follows the ‘creative destruction’
of the institutional order that is associated
with institutional entrepreneurship, rather
than preceding it. The exact nature of the
relationship between uncertainty and institu-
tional entrepreneurship is, therefore, not
entirely clear, and further research is
warranted.
Another body of work has focused on the
tensions (Dorado, 2005; Zilber, 2002; Rao
et al., 2003; Seo & Creed, 2002; Greenwood
et al., 2006) and contradictions (Sewell,
1992; Seo and Creed 2002; Rao et al., 2003)
which, it is argued, are always present in
fields – even mature ones – and which pro-
vide potential for institutional change. A
range of writers have noted that, despite
work that sees institutional fields as totaliz-
ing and shared phenomena, they are in fact
riven with inconsistencies and conflict
(Friedland & Alford, 1991; Holm, 1995;
Hoffman, 1998; Clemens & Cook, 1999; Seo
and Creed, 2002). So, although institutional
processes may appear to be stable because
differences among actors are ‘temporarily
resolved by socially negotiated consensus’,
this appearance of stability is ‘misleading’
(Greenwood et al., 2002: 59). Boundaries are
not static, conflicts among actors arise, and
204 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
structuration does not produce perfect repro-
duction (e.g., Holm, 1995). Institutions are
therefore not homogenous or complete inso-
far as they do not precisely determine behav-
iour: multiple institutions may exist in a
given field and conflict with each other; new
members with different histories and experi-
ences may join a field; and existing members
may have access to more than one field and
therefore exposure to a range of practices
(Clemens & Cook, 1999). Institutional
change thus results as human praxis is
brought to bear on these tensions and contra-
dictions: as individuals use contradictions to
reflect on and critique the limits of present
institutional arrangements and to inspire
ideas for new ones; and as they mobilize and
engage other actors in collective action to
reconstruct the field (Seo & Creed, 2002).
States
Another body of work interested in identify-
ing the field conditions that are most
amenable to institutional entrepreneurship has
focused on the particular state of the field –
whether it is emerging, mature and stable, or
in crisis (Fligstein, 1997). Certain types of
field have been associated with greater
likelihood of institutional entrepreneurship.
It has, for example, been argued that
emerging fields offer considerable scope for
institutional entrepreneurship because the
lack of institutionalized practices results in
fluid relationships, conflicting values, and
the absence of clearly identifiable norms – all
of which, in turn, may pose problems that
actors wish to solve; or provide opportunities
on which they can capitalize (Maguire et al.,
2004). Child, Yu and Tsai (2007) show how
the state took advantage of the emergent
nature of China’s environmental protection
field to act as an institutional entrepreneur,
drawing on developments in other fields
related to international environmental con-
cerns and domestic economic reform.
Emerging fields may then be particularly
conducive to institutional entrepreneurship,
as considerable advantages can be derived
for those who succeed in influencing the way
in which a field eventually becomes struc-
tured structured. Also the constraints are
fewer compared to mature fields: there are no
established patterns to mimic; widely shared
values and norms have yet to develop; and
power is more diffuse (Maguire et al., 2004).
Similarly, fields in crisis may also be par-
ticularly conducive to institutional entrepre-
neurship, as a crisis can bring to the surface
contradictions and tensions in even highly
structured, mature fields (Fligstein & Mara-
Drita, 1996). These disruptive events
(Hoffman, 1999), shocks (Fligstein, 1991),
triggering events (Rao et al., 2003) or jolts
(Meyer, 1982) can take multiple forms –
social upheaval, technological disruptions,
regulatory change, or the publication of
books, reports, and media stories (e.g.,
Davis, Diekmann & Tinsley, 1994; Garud,
Jain & Kumaraswamy, 2002; Lounsbury,
2002). For instance, Fligstein (2001a) shows
how a crisis in the European Union enabled
the European Commission to act as an insti-
tutional entrepreneur and develop the Single
Market Programme. Disruptive events are
capable of ‘ending what has become locked
in by institutional inertia’ through the way
they create ‘disruptive uncertainty for indi-
vidual organizations, forcing the initiation of
unorthodox experiments that diverge from
established practice’ and ‘throwing entire
industries into the throes of quantum change’
(Hoffman, 1999: 353). Such events may
precipitate the entry of new players into an
organizational field, facilitate the ascendance
of existing actors, or change the intellectual
climate of ideas (Greenwood et al., 2002;
Greenwood & Suddaby, 2006). In so doing,
they both disrupt existing practices and raise
awareness of possible new ones, thereby
opening up greater opportunity for action.
In sum, certain stimuli – uncertainty, prob-
lems, tensions and contradictions in a field –
can establish favourable initiating conditions
for institutional entrepreneurship by motivat-
ing and furnishing ideas for change.
Additionally, fields in particular states,
 INSTITUTIONAL ENTREPRENEURSHIP
especially emerging ones and those in crisis,
are also more likely to present opportunities
for institutional entrepreneurship, although
some researchers argue that uncertainty,
problems, tensions and contradictions are, to
some degree, features of all fields, even
mature fields. Much of this work tends to
conceptualize the state of the field as a set of
objective conditions that trigger acts of insti-
tutional entrepreneurship. Munir (2005),
however, argues that the way in which events
are interpreted and given meaning is part of
institutional entrepreneurship. In other
words, for an event to be deemed disruptive –
creating a situation of uncertainty, contradic-
tion or tension, causing a crisis, etc. –
requires that actors interpret it as disruptive.
The role of interpretation in institutional
entrepreneurship is discussed in more detail
in the following section.
INTERPRETIVE STRUGGLES
A growing body of work on institutional
entrepreneurship examines interpretation and
explains institutional change with reference
to complex, ongoing struggles over meaning
among numerous actors, the outcomes of
which are not necessarily predictable or con-
trollable. Drawing on social constructionist
assumptions (Berger & Luckmann, 1967) to
emphasize translation at the micro-level
(Czarniawska & Joerges, 1996; Zilber, 2002)
and discourse at the macro-level (Phillips
et al., 2004; also see Phillips & Malhotra,
Chapter 29 in this volume), this work builds
on the idea that institutions are formed as
meanings come to be shared and taken for
granted. In contrast to the diffusion metaphor
that has dominated much of institutional
theory, and which ‘connotes a transmission
of a given entity,’ the translation metaphor
‘connotes an interaction that involves
negotiation between various parties, and the
reshaping of what is finally being transmit-
ted’ (Zilber, 2006: 283). Actors are not
viewed simply as carriers of institutional
205
meanings associated with practices, diffusing
them intact and unchanged through a field;
rather, all actors in the field are viewed as
active interpreters of practices whose
meaning is, as a result, negotiated in on-
going, complex processes.
In this regard, ‘individuals’ interpretations
can be seen as part of institutional agency –
the social actions that create, reproduce, and
change institutions’ (Zilber, 2002: 236; see
also Karnoe, 1997). This work focuses atten-
tion on the symbolic aspects of institutional
change (see Zilber, Chapter 5 in this volume)
and, specifically, on how actors draw on dif-
ferent discourses, and find new ways to
frame and theorize change. From this per-
spective, institutional entrepreneurship is
seen to emerge from novel interpretations
and ensuing struggles over meaning,
although it also recognizes that, because
meanings of existing practices are supported
by existing logics, myths and discourses,
they may not be easily displaced. Meaning
thus takes on multiple roles in an institutional
field. First, it is the outcome for which actors
struggle. Different actors have stakes in par-
ticular meanings and attempt to assert their
preferred ones (Grant & Hardy, 2004).
Second, it is the medium through and within
which power struggles take place as actors
try to influence institutional change (Zilber,
2006). In this regard, meanings are a
resource (Zilber, 2002) – they are drawn
upon by actors to support their positions and
to undermine those of opponents – and, at the
same time, a contextual constraint, since
field and societal level logics (Lounsbury
et al., 2003), myths (Zilber, 2006) and dis-
courses (Phillips et al., 2004) are not infi-
nitely pliable.
Drawing on these ideas, a growing body of
work has started to explore the processes of
discursive struggle through which institu-
tional entrepreneurship succeeds or fails. For
example, Zilber (2002: 251) shows how
struggle over the meaning of institutionalized
practices at a rape crisis centre – whether they
were ‘feminist’ or ‘therapeutic’ – affected
power relations inside the organization
206 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and, as a result, the services that it provided,
but not in predictable, predetermined or
clearly managed ways. Similarly, Maguire
and Hardy (2006) examine the creation of a
new global regulatory institution – the
Stockholm Convention on Persistent Organic
Pollutants – which, consistent with the
discourse of ‘precaution’, bans toxic chemi-
cals based on uncertain scientific knowledge
of the risks they pose. The new institution
was the outcome of discursive struggle
among actors over the meaning of ‘precau-
tion’: some state and non-state actors
promoted the new discourse of precaution;
while other actors countered with the legacy
regulatory discourse of ‘sound science’. As a
result, actors on both sides were forced to
engage with and reconcile competing dis-
courses and it was out of this struggle that the
particular institution emerged. In another
study, Zilber (2007) shows how institutional
entrepreneurship in the high-tech industry in
Israel following the 2000 dot.com crash
involved the construction of a shared story of
the crisis that reinforced the established insti-
tutional order. Yet, at the same time, actors
were also telling separate ‘counter-stories’
that called for changes in the institutional
order. Stories were both the medium of and a
resource for institutional entrepreneurship
but not in a clear-cut, strategic way; actors
used stories both to protect vested interests in
the current institutional order, as well as to
agitate for change – all at the same time.
As these examples illustrate, this growing
body of work draws attention to meaning as
a collective achievement and emphasizes the
complex and contradictory processes through
which it is negotiated and stabilized. This
work highlights not only the potential
‘messiness’ of institutional entrepreneurship
processes as discursive manoeuvre are met
with counter-moves, but also the potential for
outcomes which are not necessarily those
originally intended by the actors involved.
It thus stands in contrast to the bulk of work
on institutional entrepreneurship which seeks
to explain the effectiveness or success of
institutional entrepreneurs in bringing about
intended institutional change, usually
with reference to specific strategies for inter-
vening in a field, as we discuss in the next
section.
INTERVENTION STRATEGIES
Institutional entrepreneurship requires actors
to dislodge existing practices (in the case of
mature fields), introduce new ones, and then
ensure that these become widely adopted and
taken for granted by other actors in the field.
How do institutional entrepreneurs succeed
in these activities to change institutional
fields? This question occupies a large portion
of the literature, which focuses on identify-
ing and explicating the strategic interven-
tions made by institutional entrepreneurs to
bring about change. Sometimes this work
focuses directly on the strategies and
activities in which institutional entrepreneurs
engage (e.g., Lawrence, 1999); at other
times, it focuses on the skills and abilities
required to carry out these activities
(e.g., Fligstein, 1997; Perkmann & Spicer,
2007). We synthesize the diverse work in this
area in terms of three broad themes: the
mobilization of resources; the construction of
rationales for institutional change, including
the discursive processes through which new
practices are framed and legitimated; and the
forging of new inter-actor relations to bring
about collective action. In this way, we show
that institutional entrepreneurship involves
the mobilization and recombination of
materials, symbols and people in novel and
even artful ways.
Resources
Resource mobilization has been central to the
notion of institutional entrepreneurship since
DiMaggio’s (1988: 14) definition highlighted
the necessity of ‘sufficient resources’ to
create or change institutions. Despite this
centrality, research is often vague as to what
 INSTITUTIONAL ENTREPRENEURSHIP
is meant by ‘resources’ as well as what is
done with them. Certainly, a wide range of
resources have been mentioned in the litera-
ture, including the use of finance, knowledge
or an actor’s position within a social network
(Beckert, 1999); political, financial and
organizational resources (Greenwood &
Suddaby, 2006); material resources
(Lawrence & Suddaby, 2006); cultural
resources (Creed, Scully & Austin, 2002);
and discursive resources (Hardy & Phillips,
1999; Hensman, 2003; Lawrence & Phillips,
2004; Maguire & Hardy, 2006). In this
section, we focus on material resources,1
which, research suggests, are mobilized by
institutional entrepreneurs to be used as a
lever against other actors – subsidiary actors,
allies, and external constituencies – to nego-
tiate support for the change project in ques-
tion (DiMaggio, 1988). In some instances,
powerful actors may control sufficient
resources to impose change on an institu-
tional field by themselves (Dorado, 2005),
but it appears that, most of the time, institu-
tional entrepreneurship involves a degree of
dependency on other actors and the resources
they control to make bargaining and negotiat-
ing inevitable. This view is consistent with
Colomy’s (1998) claim that institutional
entrepreneurs employ strategies that operate
through exchange mechanisms: support for a
project is contingent on the perception that
tangible and/or intangible benefits are forth-
coming to other actors. Some entrepreneurial
strategies are premised on positive induce-
ments offered to prospective allies in
exchange for their support. Others are
premised on negative inducements in the
form of threats to establish a bargaining rela-
tionship in which the coerced party’s ‘best
hope is that it will be no worse off than it
would have been had the coercive relation-
ship never commenced’ (Turner & Killian,
1987: 298–299; quoted in Colomy, 1998:
280). In this way, institutional entrepr-
eneurship involves materially rewarding
supporters and punishing opponents.
If institutional entrepreneurs do not con-
trol rewards and punishments, they can
207
recruit allies that do. Several studies draw
attention to how institutional change in a
given field depends upon other extant institu-
tions, especially legal and professional ones
in which institutions to be changed are nested
(cf. Holm, 1995). In other words, the formal
authority of other actors such as the state and
professional associations can be harnessed as
a resource to support change. For example, in
his study of the early stages of the emergence
of the automobile industry, Rao (2002)
demonstrates how one mechanism for gener-
ating constitutive legitimacy for innovative
products around which new industries
emerge is the enactment of laws that make
the product legal and specify how it can be
made, sold, used, etc., thus authorizing and
codifying understandings of the new artifact
and practices of using it. Similarly, Garud et
al. (2002) note how the legal system can be
drawn upon to create new rules or to enforce
old ones, both of which can be used to
advance institutionalization projects. Of
course, opponents of institutionalization
projects can also seek to enroll higher author-
ities, and different authorities may clash. So,
while Greenwood et al. (2002) show how
professional associations lent their authority
to the elite accounting firms’ adoption of a
new multidivisional organizational form,
they also note the ultimately determining role
played by the state in legislating an end to
experimentation with this form.
Rationales
Institutional entrepreneurship also involves
interventions in the discursive or ideational
realm as actors construct rationales or rea-
sons and communicate them to other actors
concerning why they should support or, at a
minimum, not resist the institutionalization
project in question. Much of this work draws
on social constructionist assumptions. A
wide range of terms from a variety of theoret-
ical traditions have been used to characterize
these processes, many of them overlapping.
We summarize this work here, highlighting
208 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
how it explores the content, context and out-
come of the communicative acts associated
with institutional entrepreneurship.
One body of work examines how the
content of the institutional entrepreneur’s
communication creates shared cognitions
(and emotions) that support institutional
change. Perhaps the most common descrip-
tion of the content of discursive interventions
associated with institutional entrepreneur-
ship derives from social movement theory.
This work has examined how institutional
entrepreneurs provide entrepreneurial
accounts (Colomy, 1998) or legitimating
accounts of their institutionalization projects
(Creed et al., 2002), in which they frame the
changes in ways to generate collective action
(Benford & Snow, 2000; also see Lounsbury
et al., 2003; Garud et al., 2002). A ‘collective
action frame’ is a coherent interpretive
structure that accomplishes three tasks: punc-
tuation, which identifies a problem and
defines it as important; elaboration, which
includes a diagnosis of the problem describ-
ing who or what is responsible for it, as well
as a prognosis describing what is required to
correct it; and motivation, which encourages
actors to participate in change (Snow et al.,
1986; Creed et al., 2002). By using particular
frames, institutional entrepreneurs can
increase the chances of successful institu-
tional change. Frames may be transposed
from the broader culture to a specific field
(Clemens & Cook, 1999; Seo & Creed,
2002), or new ones may be built (Rao, 1998).
Similarly, within institutional theory, the
study of theorization (Strang & Meyer, 1993;
Greenwood et al., 2002) has explored how
institutional entrepreneurs specify a problem
with existing practices and justify new ones
as a solution.
In the case of both framing and theoriza-
tion, institutional entrepreneurs attempt to
discredit the status quo and to present the
alternative practices they are championing as
necessary, valid and appropriate in ways that
resonate with other field members (Rao,
1998). These legitimating accounts typically
combine normative and interest based
appeals: existing practices are decried as
unjust and accused of being inefficient or
ineffective; and institutional entrepreneurs
have been shown to deploy an array of argu-
ments that include different appeals for dif-
ferent constituencies in the field (Maguire
et al., 2004). As a result, evangelical appeals
(Rao, 2002) in support of institutionalization
projects are often combined with ‘rational’ or
‘technical’ demonstrations of efficiency and
effectiveness. It is important, however, to
keep in mind that so-called rationality is
nonetheless socially constructed: ‘entrepre-
neurs commonly invoke efficiency and effec-
tiveness strategically and ceremonially to
advance their projects; the validity of these
claims is rarely demonstrated in an unequiv-
ocal way, however, and rests chiefly on the
project’s perceived conformity to institu-
tional myths’ (Colomy, 1998: 289). In addi-
tion, legitimating accounts often take the
form of stories or narratives (Lounsbury &
Glynn, 2001); contain rhetoric deployed
strategically to increase their impact
(Greenwood & Suddaby, 2005); and are
typically communicated to audiences
through the production, distribution and con-
sumption of texts (Philips et al., 2004).
Another body of work describing the dis-
cursive interventions associated with institu-
tional entrepreneurship draws attention to the
context in which legitimating accounts are
produced. Appreciating that institutional
change is always situated in some historical
and cultural context, research has shown how
institutional entrepreneurs selectively adopt
and deploy some of the alternative logics
available to them (Seo & Creed, 2002); and
align their projects to master rules of society
(Havemen & Rao, 1997), cultural accounts
(Creed et al., 2002), professionalization proj-
ects (Rao, 1998), or professional standards
(Dejean et al., 2004). In order to gain accept-
ance for change, actors typically position it in
terms of existing categories and schema
(Hargadon & Douglas, 2001); and draw upon
available discourses (Hardy & Phillips, 1999;
Lawrence & Phillips, 2004) to make change
meaningful to other actors in particular ways.
 INSTITUTIONAL ENTREPRENEURSHIP
A third body of work examines institu-
tional entrepreneurs’ discursive interventions
in terms of the desired outcomes they are
designed to achieve in relation to the targeted
audience. The work varies in terms of the
degree of to which this audience is accorded
a role in the change process. Sometimes, the
audience is seen as contributing to institu-
tional entrepreneurship in a reciprocal
relationship. For example, it has been argued
that institutional entrepreneurship involves
sharing ideas (Boxenbaum & Battilana,
2005) and participating in collective sense
making (Edelman & Suchman, 1997) with
other actors, who thereby become part of the
change process. Most work, however, places
much more emphasis on a unilateral relation-
ship where the institutional entrepreneur:
persuades other actors (Dew, 2006; Garud
et al., 2002); reorganizes their preferences
(Fligstein, 2001a); aligns (Demil &
Benesdrine, 2005), translates (Maguire et al.,
2004) or aggregates (Fligstein, 1997) their
interests in relation to the institutionalization
project; and builds consensus among
members of the field (Dew, 2006). In this
work, there is greater emphasis on the role
and skills of the institutional entrepreneur in
achieving the desired outcome; and less
concern for the role of other actors.
Relations
Institutional entrepreneurship often involves
establishing new inter-actor relations to
bring about change, primarily – as much of
the work discussed above indicates – through
collective action (Dew, 2006; Aldrich & Fiol,
1994; Garud et al., 2002; Lawrence et al.,
2002; Wijen & Ansari, 2007). Given that
institutional entrepreneurship is about alter-
ing deeply embedded norms, values and
practices, it is not surprising that it depends
upon more than a single individual or organ-
ization. As a result, both the mobilization of
material resources and the construction and
communication of rationales for change are
typically means to develop new relations
209
among actors, such as collaborations, coali-
tions, and alliances.
Institutional entrepreneurship is, then,
associated with various forms of collabora-
tive relations – partnerships, coalitions, etc. –
which require the cooperation of other
actors. For this reason it has been suggested
that institutional entrepreneurs have unique
political and social skills (Perkmann &
Spicer, 2007), including ‘the ability to induce
cooperation among others’ (Fligstein, 2001a:
112). As a result, institutional entrepreneurs
engage in a range of material and discursive
interventions aimed at changing inter-actor
relations and bringing about collective
action. In so doing, institutional entrepre-
neurs do not work single-handedly; they
engage with other members of the field.
Institutional entrepreneurship therefore
seems to be predominantly a collective
process.
We can, then, see a link between interven-
tion strategies which mobilize material
resources and rationales and the subsequent
mobilization of actors to participate in
collective action or to adopt new practices –
actions in which actors might not otherwise
engage, were it not for the interventions of
institutional entrepreneurs. In this way, insti-
tutional entrepreneurship is tightly connected
to the exercise of power (Fligstein, 2001b).
Because institutional fields are arenas of
ongoing and shifting power relations that are
only ever contingently stabilized, institu-
tional entrepreneurship can be seen as the
realignment of material, discursive and orga-
nizational forces around new relations and
practices (Levy & Scully, 2007). It requires
‘the assent or, minimally, the acquiescence
of various groups as well as the capacity
to prevail over opposition’ (Colomy, 1998:
278). The overt leveraging of material
resources to ensure change even in the
face of resistance, such as offering
financial incentives, imposing penalities, or
invoking formal authority, etc., represents the
exercise of the first dimension of power
(Lukes, 1974). Discursive interventions
to create and communicate convincing
210 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
rationales represent the exercise of what
Lukes (1974) referred to as the third dimen-
sion of power, which aims to create legiti-
macy for new practices and institutional
change by managing meaning (Pettigrew,
1979); and to coopt opponents rather than to
confront them, thereby avoiding overt
conflict and resistance (Hardy, 1985). For
example, research has highlighted that insti-
tutional entrepreneurs use stories strategi-
cally to ‘help induce cooperation from
people in their group that appeal to their
identity and interests’ (Fligstein, 2001b: 113;
also see Colomy, 1998). Similarly, much of
the work informed by social movement
theory shows how framing is used purpose-
fully to enroll allies and to build coalitions
(Rao, 1998; Rao et al., 2000). Less promi-
nent in the literature are discussions of how
institutional entrepreneurship involves exer-
cising the second dimension of power
(Bachrach & Baratz, 1962; Lukes, 1974) to
manipulate decision agendas, arenas and par-
ticipants to bring about change (Hardy,
1994), although agenda setting has received
some mention (see Fligstein, 2001b). In addi-
tion, perhaps because of a bias towards
studying successful instances of institutional
entrepreneurship or because of the interest in
the ‘heroic’ entrepreneur, non-cooperative
actors are frequently ignored and actors that
resist change do not figure as prominently
in analyses of intervention strategies as
one might expect. We expand upon this
observation in the next section.
INSIGHTS
Most studies have found institutional entre-
preneurs to be highly influential in shaping
their institutional fields, contributing to a
range of outcomes that include the creation
of new formal institutions, industries, organi-
zational forms, practices and identities. For
example, empirical work shows that institu-
tional entrepreneurship has resulted in new
formal regulatory institutions at national,
international and global levels of analysis,
including national regulations governing
industrial wastes (Demil & Bensédrine,
2005); the reconstitution of the European
Union (Fligstein, 2001a); and the Stockholm
Convention on Persistent Organic Pollutants
(Maguire & Hardy, 2006). It has also con-
tributed to the emergence of new industries
(Aldrich & Fiol, 1994), such as socially
responsible investment in France (Dejean
et al. (2004), whale-watching (Phillips &
Lawrence, 2004) and forensic accounting in
Canada (Lawrence, 1999), as well as inde-
pendent power production (Russo 2001),
craft brewing (Rao, 2002), the electricity
industry (Hargadon & Douglas, 2001) and
recycling (Lounsbury, Ventresca & Hirch,
2003) in the US. New organizational forms,
such as the multidivisional organizational
form in publishing (Thornton, 2002) and
accounting (Greenwood et al., 2002;
Greenwood & Suddaby, 2006; Suddaby &
Greenwood, 2005), have emerged from
successful institutionalization projects.
Institutional entrepreneurs have promoted
the adoption of new practices, ranging from
the introduction of business plans in
museums (Oakes, Townley & Cooper, 1998);
new forms of diversity management
(Boxenbaum & Battilana, 2005); new
exchange media in radio broadcasting
(Leblebici et al., 1991); and new technologi-
cal standards (Garud et al., 2002). Finally,
institutional entrepreneurship has led to new
identities for individuals (Fligstein, 2001b;
Maguire et al., 2001; Creed et al., 2002: Rao
et al., 2003) and organizations (Rao et al.,
2000; Greenwood et al., 2002; also
see Chapter 16 on identity theory in this
volume).
Some of these outcomes are more conse-
quential for the field than others, resulting in
major upheaval or transformation as power
relations among actors are reconfigured, and
only after significant contestation and
struggle. Others represent changes that,
while they might be quite marked, do not
entail a significant redistribution of capital
(Bourdieu, 1990) in the field – as a result of
 INSTITUTIONAL ENTREPRENEURSHIP
the institutionalization of new practices,
dominant actors may do things differently
but they remain dominant. In this way, we
can see evidence of two different narratives
of institutional entrepreneurship in the litera-
ture – one that is more actor-centric and
focuses on the deliberate strategies of partic-
ular institutional entrepreneurs; and another
which is more process-centric and focuses on
the struggles associated with institutional
entrepreneurship.
The majority of the literature constructs,
explicitly or implicitly, a narrative centred
on the institutional entrepreneur. This narra-
tive tends to be more functionalist, and to
paint a neat picture of relatively rational,
linear, win-win problem-solving activity
where the (usually successful) institutional
entrepreneur possesses a degree of reflexivity
or insight (Seo & Creed, 2002; Mutch, 2007)
that allows them to identify opportunities for
change as a result of some stimuli, such as
uncertainty or a recognized problem in the
field (e.g., Beckert, 1999; Lee & Pennings,
2002; Dew, 2006). Then, using their superior
political and social skills, the actor inter-
venes strategically to realize institutional
change through the combination and mobi-
lization of resources, rationales and relations
in creative ways (Fligstein, 2001a; 2001b).
Other actors play minor, supporting – and
cooperative – roles if they figure at all,
and conflict is pushed to the background.
The new or changed institutions typically do
not imply or reflect a radical reconfiguration
of power relations in the field: they are ‘elab-
orative’ rather than ‘reconstructive’ projects
(Colomy, 1998). For example, dominant
players may adopt new practices but retain
their dominance and, in fact, may change
their practices in order to remain dominant
(e.g., Greenwood et al., 2002, 2006). In fact,
institutional entrepreneurship activities are
often described, in this narrative, as being
directed at aligning change with – and often
embedding it in – existing values, logics and
practices, which results in minimal change in
power relations (e.g., Hargadon & Douglas,
2001). In the case of emerging fields, the
211
elaboration requirements may be greater
insofar as fluid, embryonic practices and
relationships have to be stabilized but, even
so, institutional entrepreneurs act with the
intention of securing a more dominant
position as the field emerges and matures
(Maguire et al., 2004). In other words,
insofar as uncertainty has been reduced,
problems have been solved, or dominance
has been secured, the functionalist orienta-
tion presents the resulting change as an
improvement on the existing situation.
However, the notion of ‘better’ institutional
arrangements is rarely problematized; and
the question of who benefits from – and who
is disadvantaged by – institutional entrepre-
neurship is rarely asked in this narrative.
In contrast, process-centric narratives
focus on institutional entrepreneurship as an
emergent outcome of activities of diverse,
spatially dispersed actors (Lounsbury &
Crumley, 2007), who face considerable diffi-
culty in achieving effective collective action
(Wijen & Ansari, 2007). This narrative
emphasizes diffuse struggles over – and
through – meaning, where gains for one
group may imply significant losses for
others, providing greater scope for examin-
ing conflict as well as failure. Narratives of
this form tend to be adopted by researchers
interested in how particular – not necessarily
intended – outcomes are negotiated materi-
ally and discursively. The outcomes that
follow from institutional entrepreneurship
are therefore more varied, ranging from: no
change, perhaps because the struggle is self-
defeating or because the prevailing
discourses are too constraining; through to
radical change and the transformation of
power relations among actors in the field.
Some researchers are sceptical, however, as
to the degree that power relations are trans-
formed when non-dominant actors engage in
institutional entrepreneurship, arguing that
new institutional arrangements emerge from
some form of ‘hegemonic accommodation’
as dominant actors cede only limited ground,
typically through partnerships with more
moderate actors in the coalition pressing for
212 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
change (Levy & Scully, 2007). In addition,
the disadvantages and possible negative out-
comes of institutional entrepreneurship are
more likely to be recognized in process-cen-
tric narratives. For example, in exploring a
project to de-institutionalize child labour in
the world’s largest soccer ball manufacturing
cluster in Sialkot, Pakistan, Khan, Munir &
Willmott (2007) found that ‘success’ in
eliminating child labour came at a high price,
especially for the women stitchers, the
majority of whom dropped out of the work-
force, often plunging their families into
abject poverty. Attention is thus paid not only
to protagonists during episodes of change –
the institutional entrepreneurs – but also to
their opponents and other members of the
field who may engage in some form of
counter-framing (e.g., Creed et al., 2002),
produce counter-narratives (Colomy, 1998)
or make discursive counter-moves (Munir &
Phillips, 2005). As a result, the purported
benefits of institutional change, as well as
attributions of causality to only a handful of
actors, are more likely to be problematized.
We acknowledge that the two narratives
are not necessarily mutually exclusive: actor-
centric accounts necessarily talk about
processes in recounting the activities in
which institutional actors engage; while
process-centric accounts inevitably single
out some actors for special attention, if only
as a reference point for their narratives.
We do not, therefore, intend to neatly divide
the work that we have reviewed into two dis-
tinct categories. Nonetheless, we can draw
some conclusions about broad patterns in the
literature. For example, work that empha-
sizes the properties of particular actors which
distinguish them as institutional entrepre-
neurs appears more likely to produce
actor-centric narratives (although the recent
interest in critical realism in some senses
combines both narratives: a concern for
reflexivity draws attention to the actor; while
an emphasis on context attends to process).
The work exploring how the position of
actors facilitates their becoming institutional
entrepreneurs also tends to produce more
actor-centric narratives when it focuses on
the activities of those occupying central,
dominant positions, especially in mature
fields, as does research that sees institutional
entrepreneurship as a form of problem-
solving. The work on contradictions and
tensions – even though socially construction-
ist – can also be actor-centric through the
way it attributes the ability to make sense out
of contradictions to specific actors, as well as
the way it sometimes treats the state of the
field and contradictions themselves as
objective and unproblematic.
On the other hand, work that treats crises,
disruptive events, or other stimuli as phenom-
ena that are discursively constructed appears
to have more potential to produce process-
centric accounts, especially when examining
the unintended and serendipitous way in
which some events get constructed in ways
that prompt change, while other similar ones
do not (although work that highlights the
unique skill of particular actors in construct-
ing these events as disruptive tends to be more
actor-centric). The work that explores inter-
pretive struggles and, specifically, how dis-
cursive struggle produces or changes the
nature of subject positions in a field, is also
more likely to result in process-centric narra-
tives. Similarly, some of the work on discur-
sive intervention strategies, especially when it
juxtaposes the competing rationales offered
by protagonists and antagonists as they press
for and resist change or when it deconstructs
explanations that naturalize why one rationale
comes to be shared among actors, is more
likely to invoke a process-centric narrative.
In comparing the two narratives, we believe
that the greater potential, as far as future
research is concerned, lies with the process-
centric narrative, for a number of reasons.
First, the concept of institutional entrepreneur-
ship is not a neutral one, and actor-centric
accounts are more prone to naturalizing and
celebrating certain actors as ‘exceptional’ in
some way, compared to process-centric ones.
As Levy and Scully (2007: 986) remind us,
entrepreneurship ‘conjures masculine images
of heroic individuals amassing wealth rather
 INSTITUTIONAL ENTREPRENEURSHIP
than collective action toward more demo-
cratic, egalitarian goals’. Concepts and termi-
nology that conjure images of activism,
collective action and struggle may be more
appropriate; and these are to be found more
readily with research that attends explicitly
and seriously to process. Second, a focus on
process and struggle encourages researchers
to explore the conceptual and temporal bound-
aries of institutional entrepreneurship – where
and when does it begin and end? Actor-centric
narratives tend to treat this unproblematically,
with researchers commonly picking up the
story of institutional change after a problem or
opportunity has been identified by the institu-
tional entrepreneur, to whom responsibility
for change is then attributed retrospectively.
But what of the role of other actors, or the spe-
cific historical discursive context in which
they find themselves, in constructing a given
situation as a problem? Is this not also part of
the process of institutional change? And does
institutional entrepreneurship necessarily end
once new practices are initially adopted,
or does it include subsequent forms of ‘insti-
tutional work’ (Lawrence & Suddaby,
2006) undertaken to ensure their ongoing
reproduction?
Third, whereas the actor-centric narrative
does not preclude issues of power, it tends to
conceptualize it as something that some
actors possess, such as material resources
that can be mobilized or formal authority that
can be exercised. The process-centric narra-
tive, on the other hand, can more readily
incorporate post-structuralist notions of
power as being inextricably bound up with
knowledge and language, and as capturing all
actors in a field. It thus encourages more fun-
damental and critical interrogations of social
reality and lends itself to more reflexivity on
the part of researchers. In this way, it offers a
number of opportunities for future research.
One area that would prove particularly fruit-
ful for future research is the study of
resistance to institutional entrepreneurship,
about which we know relatively little given
the tendency, especially of the large number
of studies presenting actor-centric accounts,
213
to largely ignore the non-cooperative reac-
tions of other members of the field. Similarly,
process-oriented accounts make it
easier to examine the phenomenon of failed
instances of institutional entrepreneurship,
something that is virtually absent from the
literature. Finally, another area for future
research is on the unintended or negative con-
sequences of institutional entrepreneurship.
We conclude this chapter by acknowledg-
ing there are dangers in the recent
groundswell of interest in institutional
entrepreneurship. While it responds to the
recognized need for institutional theorists to
move beyond the constraining effects of
institutions and to put agency back into
institutional analyses of organizations, there
is a risk that the pendulum will swing too far
in the other direction – celebrating heroic
‘entrepreneurs’ and great ‘leaders’ who bring
about change intentionally, strategically and
creatively – and, in so doing, reify fields,
actors and the process of change itself.
Instead, we need research that interrogates
critically and in more depth the phenomena
that interest us, and we believe the way to do
so is to keep matters of power and process
central to the study of institutional change.
ACKNOWLEDGMENTS
The authors gratefully acknowledge the financial
support of the Social Sciences and Humanities
Research Council of Canada and the Australian
Research Council (Discovery funding scheme, project
number DP 0771639).
NOTE
1 As can be seen from this heterogeneous list, the
notion of resource mobilization can include material,
symbolic and human/organizational resources.
However, because of important differences among
them, particularly how they relate to power,
we address them separately in terms of three
themes – resources, rationales, and relations. Broadly
speaking, these themes correspond to the three
interlaced dimensions of field structure – material,
discursive, and organizational – proposed by Levy
and Scully (2007).
214 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
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Circulating Ideas: Imitation,
Translation and Editing
Kerstin Sahlin and Linda Wedlin
Early institutional theoretical development
grew out of the observations that formal
organizational structures become increas-
ingly complex as new organizations emerge
and as existing organizations incorporate
new practices and procedures. Such elabo-
rated formal organizational structures, Meyer
and Rowan (1977) convincingly showed,
cannot be understood as devices for
enhanced coordination and control, but
reflect societal institutions, or rational myths.
These basic notions were summarized in one
paragraph of the seminal paper of 1977:
The growth of rationalized institutional structures
in society makes formal organizations more
common and more elaborate. Such institutions are
myths which make formal organizations both
easier to create and more necessary. After all, the
building blocks for organizations come to be lit-
tered around the social landscape; it takes only a
little entrepreneurial energy to assemble them into
a structure. And because these building blocks are
considered proper, adequate, rational, and neces-
sary, organizations must incorporate them to avoid
illegitimacy. Thus the myths built into rationalized
institutional elements create the necessity, the
opportunity, and the impulse to organize ration-
ally, over and above pressures in this direction cre-
ated by the need to manage proximate relational
networks. (345)
8
When reading this paragraph 30 years
after it was published it is striking to note
that not only does this single paragraph
encapsulate the motives and problems behind
the entire theoretical development of organi-
zational institutionalism, but it also largely
portrays the development of this research tra-
dition over the three decades. Initially, the
main focus was on individual organizations
and how their formal structures became at
the same time increasingly complex and
increasingly similar as they incorporated
institutional elements from their environ-
ments. Subsequently, the research interest of
many scholars turned to wondering about
how such institutional elements came to be
‘littered around the social landscape.’ Thus
they began to study the ‘supply side’ of
myths: how institutional elements came to be
produced and diffused. More recently several
studies have significantly developed our
knowledge of how such myths become ‘con-
sidered proper, adequate, rational, and neces-
sary’ – thus how it becomes essential that
organizations incorporate them in order to
avoid being considered ‘illegitimate.’
In particular, we find such a progress of
research when we follow those studies that
 CIRCULATING IDEAS: IMITATION, TRANSLATION AND EDITING
have focused especially on the circulating
ideas that become rational myths. This
research developed early in Scandinavia (see
e.g., Brunsson 1989; Brunsson and Olsen
1993; Czarniawska and Sevón 1996a). The
Scandinavian scholars were early inspired by
and learned from John Meyer’s studies,
thoughts and theories, but clearly mixed and
translated them together with other research
traditions that had been influential in
Scandinavia for some time, or those that
were emerging in Europe at the time. The
Scandinavian studies built on studies of deci-
sion-making under ambiguity as developed
by James March and his colleagues, on social
construction and institutionalization as
developed by Berger and Luckmann and
related European traditions and on studies in
science and technology as developed by,
among others, Latour, Callon, and Knorr-
Cetina. (See Czarniawska, Chapter 32 in this
volume, for an elaborated history on
Scandinavian institutionalism.) Moreover,
institutional theories were incorporated into a
tradition that was based primarily on qualita-
tive studies with a long tradition of case stud-
ies and of close studies of individual
decision-making processes, organizational
change processes and reforms. In this way,
the Scandinavian research primarily came to
highlight the dynamic aspects of circulating
ideas; how and why ideas become wide-
spread, how they are translated as they flow
and with what organizational consequences.
Even if the close ties between the
Scandinavian and American institutional
scholars have continued to develop, as is evi-
dent in the edited volumes with contributions
from Scandinavian and North American
scholars (Scott and Christensen 1995;
Czarniawska and Sevón 1996a, 2005; Sahlin-
Andersson and Engwall 2002; Djelic and
Sahlin-Andersson 2006a), ‘Scandinavian
institutionalism’ (Czarniawska and Sevón
1996b) has largely developed along its own
path having only a limited impact on the
North American studies. Focusing specifi-
cally on this line of research, this chapter
presents main themes and trajectories of the
219
Scandinavian research on circulating ideas,
and relates them to main issues and debates
in organizational institutionalism.
We begin by reviewing research focusing
mainly on the adopting organization – and on
the processes through which individual
organizations adopt ideas. Such research
reveals how and why ideas are attended to,
adopted and incorporated in organizations.
Imitation has been shown to be one main
mechanism through which organizations
become exposed to and pick up ideas.
Following on such conclusions, studies have
paid special attention to who is imitating
whom and how, making use of the concepts
of identity and fields. A number of studies
have depicted adopting organizations as fash-
ion followers, emphasizing the social and
temporal aspects of imitation and adoption.
As important as understanding the drivers
for adopting new ideas is seeing why and
how ideas come to be ‘littered around the
social landscape,’ hence a second line of
research has focused on the construction,
supply and transfer of ideas. Ideas do
not diffuse in a vacuum but are actively
transferred and translated in a context of
other ideas, actors, traditions and institutions.
This brings actors and interests into the
analysis. A common theme of these
studies is that ideas do not remain unchanged
as they flow but are subject to transla-
tion. To imitate, then, is not just to copy, but
also to change and to innovate. As diffused
ideas are translated throughout their
circulation, and as they evolve differently in
different settings, they may not only
lead to homogenization but also to variation
and stratification. The concept of editing
has served to describe and explain
how such translation proceeds – thus further
focusing on the dynamics of circulating
ideas.
Even if many studies of circulating ideas
have paid attention to how ideas flow and
how they are edited as they circulate, empha-
sis in earlier research was on the travel routes
and means rather than on the content of the
ideas as such (Meyer 1996: 250). Later, more
220 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
emphasis was placed on the content and form
of the ideas that were spread. As already
mentioned, ideas change as they flow. Ideas
in the form of models and practices can be
adapted, modified or reshaped, but ideas can
also take on new forms and meanings as they
flow within and between contexts. Many
ideas have been found to form the foundation
of and inspiration for new regulations –
in the form of standards, guidelines,
assessing criteria and templates. This has
triggered a stream of research addressing
issues on how soft regulation and governance
of the kind just mentioned emerges, and
with what results. It has also been accompa-
nied by an increased interest in the
consequences that widely diffused ideas
bring. Meyer and Rowan primarily
emphasized the ceremonial adoption of
rationalized myths and the decoupling of
such myths from ongoing activities of organ-
izations. Subsequent research has pointed to
a broader scope of consequences. Widely
circulated ideas have proved to result in or
contribute to changes in individual
organizations’ identities, in field transforma-
tions and in more general institutional
changes.
Each of these research themes is discussed
in the following sections. Two important con-
clusions clearly run through this research tra-
dition, and are thus highlighted throughout
the chapter. First, while one main question
that initiated the research of organizational
institutionalists was that of homogenization –
the program has increasingly become aware
of the important consequences, in terms of
variation and stratification, that follow dif-
fused ideas. Second, while Meyer and Rowan
clearly emphasized the decoupling of
ceremonially adopted ideas from organiza-
tional practices, research has, over time,
clearly shown the consequential effects of
such adopted ideas on formal structures as
well as on day-to-day organizational
practices. Thus circulating ideas are not only
ceremonially adopted but have been shown
to result in both organizational and institu-
tional change.
HOW AND WHY DO ORGANIZATIONS
ADOPT IDEAS?
Many scholars of organizations noticed in
the 1980s and 1990s that organizations were
picking up popular ideas and seeking to
incorporate them into their formal structures.
Those ideas that were most clearly observed
to diffuse in such a way were often what
appeared to be fashionable management
ideas. These were techniques and models for
better management, often introduced by con-
sultants or other proponents of improved
management, some of them specifically
labeled with acronyms that quickly become
part of management vocabulary. These waves
included total quality management (TQM),
business process reengineering (BPR),
management by objectives (MBO), supply
chain management (SPC), service manage-
ment, new public management (NPM),
project management, integrated management
control, intercultural management, knowl-
edge management and others. In the
early 2000s popular waves of ideas have
included various forms of evaluations,
assessments and rankings, certifications and
accreditation procedures and evidence-based
guidelines. Together with those models
organizations came to incorporate a new –
and what was seen to be more modern –
terminology.
Much, but far from all, of the early work in
this tradition was performed in Scandinavia,
largely in studies of public sector organiza-
tional reforms. Many of these were case stud-
ies of individual organizational reforms and
thus the focus was on how individual organi-
zations picked up, adopted and incorporated
new ideas or organizational elements. The
introduction of new management principles
was clearly evident in this sector when
references to private sector management
were becoming increasingly common, but
the imported ideas at the time still stood out
as very different from the administrative
tradition of the public sector. Striking exam-
ples were the introduction of the service and
customer concepts in the public sector
 CIRCULATING IDEAS: IMITATION, TRANSLATION AND EDITING
(see, e.g., Sahlin-Andersson 1996; Forssell
and Jansson 1996). The new terminology and
the new techniques were introduced into the
public sector organizations together with a
widespread questioning of the previous ways
of working. Furthermore, the new techniques
did not always work as planned and were in
many cases found to be decoupled from the
daily operations (Brunsson 1989, 2006;
Brunsson and Olsen 1993).
These observations were clearly in line
with those proposed by both Meyer and
Rowan and DiMaggio and Powell. Two kinds
of observations, however, even if they did not
stand in opposition to the assumptions
and propositions of Meyer and Rowan and
DiMaggio and Powell, called for an extended
framework and additional conceptual tools.
These reactions were elaborated in the edited
volume Translating Organisational Change
(Czarniawska and Sevón 1996a). First, even
if instances of decoupling repeatedly
occurred, in many instances the introduced
language and models did have clear conse-
quences in terms of how the organizations
and practices came to be identified, assessed
and presented. Diffused ideas could add to or
result in changes to organizational identities
and to what appeared as normal, desirable
and possible – thus circulated ideas appeared
to trigger institutional change (Sahlin-
Andersson 1996; Forssell and Jansson 1996;
Brunsson and Sahlin-Andersson 2000;
Blomgren 2003).
The second, and more detailed set of
observations, point out that the framework
that had been developed around the concept
of diffusion appeared too static and mechan-
ical in relation to the observations made. The
concept of diffusion was easily associated
with a physical process, as though what was
spreading was a physical entity originating
from one source and (while gaining its power
to spread from this source) then becoming
more diffuse and diffused. This view has led
researchers and practitioners to seek best
practices to identify ‘the original’ source of
an idea. The perspective is an instrumental
one – good and powerful ideas are assumed
221
to spread more widely than less effective
ones. This reasoning may lead to a call for
more historical studies to satisfy the need to
go back to search for the original source.
Once we start analyzing and comparing
ideas, however, it is difficult to distinguish
any intrinsic success criteria for ideas that
will ‘make it.’ Hence, it is often pointless – if
not downright impossible – to find an origin
(Bourdieu 1977). So it appears to be not so
much a case of ideas flowing widely because
they are powerful, but rather of ideas
becoming powerful as they circulate. For
example, some ideas seem to become popu-
lar, not primarily because of their properties
but because of who transports and supports
them and how they are packaged, formulated
and timed (Czarniawska and Joerges 1996;
Røvik 1998). Ideas become legitimate, popu-
lar and even taken for granted as being
effective and indispensable as a result of
having been adopted by certain actors in
the field (Tolbert and Zucker 1983;
Westphal, Gulati, and Shortell 1997). In this
way, managerial fads and fashions evolve,
some ideas becoming popular for a time then
disappearing again or becoming institution-
alized (Abrahamson 1991, 1996; Collins
2000). Again, historical and contextual
studies are called for, but not solely with the
aim of looking for the original source of dif-
fused ideas; close studies of the circulation of
ideas do, in fact, show why some turn out to
be so attractive and powerful. Furthermore,
the observations showed that such circulating
processes need to be understood in social
rather than physical terms. What was spread-
ing were not ready-made and unchangeable
particles or goods, but ideas subject to repeti-
tive translation (see further Czarniawska and
Sevón 1996a; 2005; Czarniawska and Joerges
1996; Czarniawska, Chapter 32, this volume).
The observations were far from new in
empirical terms. DiMaggio and Powell did
emphasize that models were not imported
whole cloth, and Westney’s work (1987)
on the imitation and innovation that formed
the modern Japanese society clearly pointed
to the way in which imitated models were
222 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
transformed as they were transferred from
one setting to another, and her analysis was
clearly one of institutional change. The imi-
tated models were not just ceremonially
adopted, but formed the basis for building the
modern Japanese society.
In theoretical terms, however, the
Scandinavian institutionalism, as Czarniawska
and Sevón (1996: 3) call it, formed a concep-
tual framework that put these dynamics at the
center and thus formed a more constructivist
foundation than the one developed in the US.
In addition, the European studies were more
micro and qualitative than the mainstream
US ones.
Appropriateness and fashion
Meyer and Rowan and DiMaggio and Powell
emphasized that the main motive for incorpo-
rating rationalized myths and for mapping
those organizations that were seen as central
and successful was to gain or maintain legiti-
macy. The Scandinavian scholars combined
this insight with more of a micro-perspective,
as they studied the processes of adoption and
sought to make sense of how individuals and
organizations acted in relation to the intro-
duced models. Organizations and individuals
acted, they argued, according to a logic of
appropriateness, as proposed by March
(1981). When initiating changes and when
attending to and adopting new ideas, they rea-
soned as follows: ‘Who am I?,’ What situation
is this?’ and ‘What does a person such as I, or
an organization such as this, do in a situation
such as this?’ Thus, individuals and organiza-
tions were depicted as clearly embedded in an
environment that provided them with expec-
tations, identities and rules for action.
In an epilogue to the volume edited by
Czarniawska and Sevón (1996a), Meyer
commented upon what distinguished this
‘European flavored’ research from the main
US tradition. He used the term ‘soft actor’ to
clarify how these European writers saw
actors as clearly embedded in cultural
material. A soft actor, thus, is an actor with
interests, resources, identities and abilities,
but at the same time the analysis acknowl-
edges that these interests, resources,
identities and abilities are neither stable nor
intrinsic to individuals or organizations.
Individuals and organizations develop their
interests, identities, resources and abilities in
their social context, and partly from the ideas
they pick up and in relation to those they
imitate. Thus actorhood as such needs to be
understood as a process of social construc-
tion (Brunsson and Sahlin-Andersson 2000).
Those individuals and organizations that
pick up ideas have been depicted not only as
acting according to a logic of appropriate-
ness but more specifically as fashion follow-
ers. The word ‘fashion’ here points to the
temporal and social logics of processes of
adoption. In several early studies fashion was
sometimes coupled with fads; both of these
were associated with the idea that certain
desires and models came in waves.
Abrahamson (1996) illustrated the bell-
shaped curve of the spread of popular ideas
such as quality circles, stressing the wave-
like movement through which ideas flow
among organizations and between contexts.
He suggests that organizations adopt mana-
gerial practices and models, such as TQM, to
conform to general norms of rationality and
progress.
Czarniawska and Sevón (2005) portray
fashion as the ‘steering wheel’ of translation
and the flow of ideas. Fashion guides imita-
tion and the attention of actors to specific
ideas, models and practices, and fashion
identifies but also creates what is appropriate
and desirable at a given time and place. This
leads organizations to adopt, but also to
translate, these ideas, thus changing both
what is translated and those who translate.
Authors of management fashions stress the
inherently contradictory nature of fashion
following: the adoption of fashionable prac-
tices and ideas is driven by both the need for
differentiation and the need for conformity
with expectations and the practices of others.
This dynamic between differentiation and
imitation provides the dynamic and the driving
 CIRCULATING IDEAS: IMITATION, TRANSLATION AND EDITING
force for idea diffusion (Røvik 1996).
Fashion followers act differently in order to
act in the same way. While building on the
recognition of Blumer (1969) that fashion is
a competition mechanism, the institutional
writers suggest that following fashion is
simultaneously an act of conformism and
creativity (Czarniawska and Joerges 1996:
34–35) and that following fashion means
both working within, thus reproducing,
and altering the existing institutional
order. Thus, fashion incorporates both
change and tradition (Czarniawska 2005;
Røvik 1996).
The concepts of appropriateness and fash-
ion both point to the social processes of idea
circulation. Ideas are circulated as individu-
als are exposed to each other and as they
compare themselves with and view them-
selves in relation to others. They define
which problems require local solutions and
shape plans about what to accomplish (this
fundamental insight has, interestingly
enough, become packaged as its own
management concept – the benchmark –
with a whole set of management techniques
associated with it). Imitation is a basic
mechanism, then, through which ideas
circulate.
Imitation and identification
Imitation is a basic social mechanism tying
people together (Tarde 1902/1969). Actors
tend to imitate those they want to resemble
(Sevón 1996). As certain models, actors or
practices become widely known, they shape
the wishes, ideals and desires of others and
thus provide the impetus for further imita-
tion. Thus, perceived identity shapes imita-
tion: one imitates those one relates to and
those with whom one identifies. The process
of imitation involves both self-identification
and recognition of what one would like to
become (Sahlin-Andersson 1996; Sevón
1996). The opposite is also true, however, in
that imitation shapes identity. Imitation con-
structs new relationships, references, and
223
identifications and opens new avenues for
comparison and for creating new identities.
In this way fashions and trends largely form
through processes of imitation.
When one views the circulation of ideas
as processes of imitation, and as involving
dynamics of identity formation, it becomes
clear that some organizations tend to be
more prone to imitate – and more receptive
to widely circulated ideas – than others.
Moreover, some organizations and ideas are
imitated more than others. While DiMaggio
and Powell associated the mechanism
of mimesis to uncertainty, the close studies
of individual organizational reforms –
and imitation – suggest identification
rather than uncertainty to be the main
explanatory concept. Brunsson and Sahlin-
Andersson (2000) saw a common pattern
in those management ideas that were
triggering organizational reforms in the
public sector. They suggested, first, that the
organizational elements that were adopted
by public sector units tended to come in
packages or strings rather than individually.
They suggested further that those ideas were
based on a common identity program –
together they reconstructed adopting units
to become more clearly identified with
those associated primarily with the adopted
new ideas. This again paved the way for
further imitation and for further identity
transformation.
A main motivation for imitation is to
become similar to others, and, even more, to
become similar to the most prestigious, lead-
ing organizations (Haveman 1993). Imitation
may also, however, be motivated by a desire
to distinguish oneself from others, to be
different. As explained by Czarniawska
(2005), building on Tarde (1890/1962), the
processes of identity formation and of imita-
tion both involve a process of alterity
construction – the formation of perceptions
of being different. As important as the ques-
tion: ‘Who am I like?’ is the question: ‘How
am I different?’ Both these motives are
grounded in identity. In order to understand
and explain, then, who is imitating whom
224 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and why, we should also study who and what
organizations identify with. The identity of a
subject – a person or an organization – is
defined in relation to others; it is derived
from its reference to and relationship with
others.
The concept of organizational fields has
been used to explore how organizations iden-
tify themselves and thus what they seek to
imitate. Groups of organizations whose
activities are defined in similar ways have
been conceived of as shaping organizational
fields. This notion has of course been a
core concept in organizational institutional-
ism. There are many variants of such field
models, building on various theories and
taking inspiration from a range of disci-
plines. Most commonly references are
made to DiMaggio and Powell (1983).
Elsewhere, we have argued for the impor-
tance of looking beyond this concept to
trace the many frameworks and theoretical
traditions that the field concept refers to and
builds on (Djelic and Sahlin-Andersson
2006b; Hedmo, Sahlin-Andersson and
Wedlin 2005).
When using the field concept to under-
stand motivations for and processes of imita-
tion, we especially build on Bourdieu’s
notion of fields. Bourdieu (1977, 1984)
argued that fields were formed and held
together by the common belief in and
upholding of the importance of certain activ-
ities. In this sense fields form reference sys-
tems, shaping the participants’ attention
structures and identities – what they view as
important issues (cf. March and Olsen 1995).
The field may also be described as a system
of relations – relations that have evolved
among the actors who define their activities
as being concerned with similar issues. In the
field a structure of central and peripheral
positions evolves. Dominating organizations
form reference points and models for the
rest of the organizations in the same field.
Coherent patterns of action and meaning
thus develop, even without any single
actor or group of actors intentionally
striving for coherence or conformity.
Moreover, peripheral actors challenge
dominant understandings, which they try to
modify and/or displace. Central actors have a
tendency to protect and defend the status
quo. They may envision bending and
adapting dominant understandings some-
what, if only to anchor and stabilize them
further. This dynamic is behind active
processes of imitation.
Translation and editing
Imitation is an active process, and can be dis-
tinguished from diffusion insofar as the latter
is defined as a phenomenon whereby a cer-
tain model, idea or practice, once created,
spreads next to a number of passive recipi-
ents or trend followers. In contrast, imitation
has been conceptualized as a performative
process (Sevón 1996). This points to the
importance of understanding how ideas are
translated, shaped and changed through
processes of imitation. The Scandinavian
scholars emphasized the social aspects
of idea circulation and thus found that
the predominant conceptual framework
with physical connotations tended to lead
researchers’ attention in unwanted directions.
Czarniawska and Sevón wrote:
Diffusion suggests a physical process, subject to
laws of physics, and thus the explanation of phe-
nomena denoted by this term provokes a further
train of physical metaphors, like ‘saturation’ or
‘resistance.’ Latour (1986) proposes to replace it
with translation calling attention to the richness of
meanings associated with this term, of which only
some are evoked in everyday life .... It is this rich-
ness of meaning, evoking associations with both
movement and transformation, embracing both
linguistic and material objects, that induced Latour
and Callon, and the contributors of this volume
after them, to borrow the notion of translation
from a contemporary French philosopher, Michel
Serres. (1996: 6–7)
It should be stressed that ‘translation’ here
is not used as a linguistic term, but points
both to movement and transformation. With
 CIRCULATING IDEAS: IMITATION, TRANSLATION AND EDITING
this conceptual framework at hand these
authors could follow where and how manage-
ment ideas traveled. As management ideas
were circulating they were translated into
objects such as books, models and
presentations (see Czarniawska and Joerges
1996; Czarniawska and Sevón 2005) and
these translations were done in the various
contexts and by the many actors involved in
circulating ideas. What is being transferred
from one setting to another is not an idea or a
practice as such, but rather accounts and mate-
rializations of a certain idea or practice. Such
accounts undergo translation as they spread,
resulting in local versions of models and ideas
in different local contexts (Czarniawska and
Joerges 1996). Both those seeking to be imi-
tated and those imitating translate ideas and
practices to fit their own wishes and the
specific circumstances in which they operate.
In search of a concept that could even more
clearly be used to analyze how ideas were
being transferred, transposed and transformed
as they circulated, one of the authors of this
chapter chose to analyze the translation as an
editing process (Sahlin-Andersson 1996). The
choice of this concept followed studies of the
circulation of the customer concept into public
sector organizations and studies of a fashion at
the time – that of building research parks. Both
studies showed how models or prototypes that
were seen as ‘successes’ were formulated and
reformulated as they circulated. Similarities
were emphasized while differences that might
lead to the conclusion that the imitated proto-
type did not fit in the local setting were played
down. In such processes of translation, new
meanings were created and ascribed to activi-
ties and experiences. In each new setting, a his-
tory of earlier experiences was reformulated in
light of the present circumstances and visions.
The circulation was a continuous editing
process performed by a number of involved
editors. Thus, those circulating management
ideas were co-constructing these same ideas
(Czarniawska and Joerges 1996, 2005; Sahlin-
Andersson 2001, Sahlin-Andersson and
Engwall 2002).
225
At first glance, editing processes might
seem to be creative and open-ended.
However, the processes of translation were
rather characterized by social control, con-
formism and traditionalism – thus following
rule-like patterns. Thus editing rules restrict
and direct the translation – or editing – in each
phase of circulation. The term ‘rule’ did not
imply that there were written or explicit
instructions for the telling and retelling of sto-
ries and ideas; neither did it imply that these
translations followed clear intentions and
established techniques among the editors.
Although there are no explicit rules to follow,
edited stories reveal how these translations
were formed by the institutional setting in
which they were performed. Thus they reveal
rules that have been followed.
As reforms and experiences are accounted
for and narrated, they tend to be framed and
presented in familiar and commonly
accepted terms so that they will make sense
to a reader or listener. Thus, experiences and
reforms tend to be presented to others in
terms of existing templates, examples,
categories, scientific concepts, theoretical
frameworks and widespread classifications
that are familiar. These concepts, references
and frameworks form the infrastructure of
editing and they restrict and direct how the
accounts are given. In such a way widespread
and well-known classifications may sort out
what is being told as accounts are delivered
and transferred (cf. Bowker and Star 1999).
Concepts, ideologies, examples, interests
and classifications are not the same every-
where. Those that dominate one setting, and
may be taken for granted in that setting, may
be unknown or unpopular in another setting.
The infrastructure, and thus the editing rules,
differs between situations and contexts. This
specific infrastructure determines the editing
of ideas and experiences. Each context in
which the editing of models and experiences
takes place may be regarded as an editing
infrastructure. We may thus describe the
process as one of recontextualizing experi-
ences and models. When using the term
226 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
‘editing’ we want to emphasize that this
recontextualization may change the formula-
tion as well as the meaning and content of
experiences and models.
Such editing rules may be more specific or
more general, and by following the routes of
circulation one can see how different
contexts provide different editing rules.
However, our studies revealed three kinds of
rules that appear to work more generally as
ideas are widely circulating (see Sahlin-
Andersson 1996). A first set of rules
concerns the context. When models are
applied in a setting that is different from that
of the prototype, time- and space-bounded
features tend to be excluded. Specific local
prerequisites are de-emphasized or omitted.
In such a way widely circulated ideas tend to
be formulated in general and abstract terms,
and ideas and experiences are made available
for others to imitate or adopt (Greenwood,
Suddaby and Hinings 2002; Røvik 1998).
Stripping models of their local context tends
to take place in several steps. For instance, it
may start when someone reports on her own
practice or experience. This person may want
to shape her presentation in a way that will
make this experience interesting to others,
disregarding aspects that seem unique and
too time- or location-specific and emphasiz-
ing those that seem to be general and
generalizable. Those who mediate ideas,
experiences and models then do further
editing, and the cycle repeats when the model
is adopted in a new setting.
A second set of rules concerns logic. As
initiatives and effects are presented, the logic
of the story is often reconstructed.
Developments may acquire a more rational-
istic flavor. Effects are presented as resulting
from identifiable activities, and processes are
often described as following a problem-
solving logic. Attention may be paid to a
certain aspect of a development, while other
aspects are omitted or erased. Plans tend to
circulate more easily than effects (Sahlin-
Andersson 2001; Hwang 2003). As these
plans are circulated, however, they are often
described as if were they effects – plans are
interpreted as accounts of how reforms have
proceeded. In the course of the editing,
accidental or coincidental circumstances are
removed, as are aspects that cannot be
explained and accounted for in simple terms.
The models that attract the interest of others
and that are deemed to be worthy of imitation
are those whose implementation seems
possible in another setting. Thus, models that
are imitated are those that are presented as
plannable, and the editing procedure may
involve emphasizing or ascribing intentions,
actors, procedures, and effects to an observed
and presented development. As procedures
are imitated they are often described as
models. As experiences in one place are
edited into a model they tend to be rational-
ized, scientized and theorized (cf. Strang and
Meyer 1993).
A third set of editing rules concerns for-
mulation. As circulating ideas and their
effects are presented and represented, they
acquire labels and may also be dramatized as
they are told in a certain kind of language.
These accounts acquire certain formats or,
stated differently, they are formed into narra-
tives of certain genres (Czarniawska 1997).
Concepts, categories, prototypical examples,
counter-examples, references and ideological
frameworks are used to structure, narrate and
make sense of a certain procedure or to draw
others’ attention to a certain development. In
order to attract attention, imitated prototypes
are reformulated in more dramatic terms, and
they are labeled in ways that make them easy
to talk about and to remember, etc. They are
packaged and commodified with labels such
as BPR, MBO, SPC, and TQM. In the editing
process various techniques may be packaged
under a common heading, or they may be
repackaged under a different heading than
they had before (cf. Frenkel 2005; Solli,
Demediuk and Sims 2005).
Through editing, an idea or an account of
a practice may be formulated more clearly
and made more explicit; however, the editing
process may also change not only the form of
the idea or account but also its focus, content,
and meaning. Even small reformulations of
 CIRCULATING IDEAS: IMITATION, TRANSLATION AND EDITING
an idea, which may accrue as the idea is
transferred from one context to another, may
fundamentally change its meaning or focus.
Thus, it is only after the fact that one can
distinguish revolutionary or fundamental
shifts from less substantial ‘semantic’-type
changes arising from editing. Furthermore,
while some aspects of an idea may remain
stable as the idea circulates, other aspects
may be transformed. Though labels often
remain the same as they diffuse easily
between settings, this does not necessarily
mean that the attendant technologies and
meanings remain the same as the idea
spreads from one context to another
(see, e.g., Mazza, Sahlin-Andersson and
Strandgaard Pedersen 2005 Solli et al. 2005).
When an idea is translated, it may also be
reframed in terms of its supporting ideology.
Such editing is clearly found if we follow the
cluster of management ideas for the public
sector that have been circulating under the
label ‘New Public Management.’ In analyz-
ing this circulation Power (1997) built on a
useful distinction, taken from Rose and
Miller (1992), between, on the one hand,
programmatic or normative elements of a
certain practice and, on the other hand, its
technological or operational elements. While
the programmatic element refers to the ideas,
aims and objectives of a certain practice, the
technological element refers to the concrete
tasks or routines of which this practice
consists. New Public Management’s program
has been extensively discussed and analyzed
in academic writings. However, when these
ideas were circulating in practice, the pro-
gram behind the techniques was not always
visible or explicit, but the technical elements,
such as the introduction of new accounting
systems, documentation instruments, pricing
systems or hiring and payment procedures,
were discussed and introduced in terms of
their technical elements. The program was
either hidden or it changed as ideas entered
into new settings. Studies have suggested
that the link between the programmatic and
technical elements of a circulating idea
may be loose and change over time
227
(e.g., Bäckström 1999; Sahlin-Andersson
2001). Some techniques, however, seem
clearly connected to a certain program, even
when such a program is not explicitly
announced as the idea is attended to and
adopted. Organizational actors may have
been attracted by a certain technique or tool,
discovering only later that this technique
presupposed certain programmatic ideas.
Vrangbæck (1999) analyzed the introduction
of a system of customers’ choice in the
Danish healthcare system, calling it a ‘Trojan
horse.’ This system was conceived and
argued for in technical terms, but when it was
implemented it changed the logic of the
whole operation. New comparisons, frames
of reference, assumptions, and overall objec-
tives were invoked by the newly introduced
techniques (see also Blomgren 1999). In this
way, circulating and edited ideas can trigger
identity change.
FLOWS, CARRIERS AND
EDITORS OF IDEAS
Even if the theoretical framework that was
presented in the previous section clearly
painted a broad pattern of idea circulation, dis-
cussing travels and translations, most empiri-
cal studies referred to above, primarily
focused on those organizations that incorpo-
rated institutional elements from their envi-
ronment, and on how individual ideas or sets
of ideas were attended to, translated and
edited in the local settings. The strong
Scandinavian tradition of case studies of indi-
vidual organizations, decision processes and
reforms kept many researchers’ attention pri-
marily on those organizations that adopted
new ideas. In subsequent studies, though,
interest more clearly turned to understanding
where those ideas came from and how they
were produced and circulated – or, to again
connect to Meyer and Rowan, how ideas came
to be ‘littered around the social landscape.’
The metaphor of travel has been used to
describe the circulation of ideas to emphasize
228 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
that management ideas do not flow automat-
ically, but follow certain often highly struc-
tured and well-worn routes (Czarniawska
and Sevón 1996a). Furthermore, translation
of ideas is an active process: there are means
of transportation that carry the ideas from
one place to another. The travel metaphor is
helpful in the sense that it directs our atten-
tion to travel routes and means of travel.
Connections between actors in the field may
explain the likely routes through which ideas
travel and the rate and speed of diffusion
(Rogers 1983). The formation of networks
and other contacts thus enables ideas to flow.
With intensified interactions among carriers,
channels have opened for the transfer of
ideas. However, as is the case with many
metaphors in organization theory, this one
should be used with some caution. If taken
too literally, it may give the impression that
ideas flow via direct interaction. And the
concept of imitation has sometimes led to a
similarly limited view; imitation still seems
to be understood primarily in terms of indi-
vidual relationships, in which a single actor
imitates one or several models. Many studies
suggest, however, that greater emphasis
should be placed on the complex webs of
imitation processes, on how several imitation
and translation processes may be intercon-
nected, and on how one process of imitation
may lead to another. And just as the term ‘cir-
culate’ indicates, the processes involve not
only the transport, flow or movement
through established channels – like blood cir-
culating through the arteries and veins of the
body – but also the distribution, spreading,
transmission or broadcasting of messages to
wider groups.
Based on our studies of the proliferation of
management education (Hedmo et al. 2005),
we distinguished between three modes of
imitation. A first mode of imitation is one in
which a central model inspires imitation.
This can be called the broadcasting mode
(March, 1999: 137). In this mode, imitation
is based on a specific model or core set of
ideas, which is picked up by actors in various
settings and incorporated into local practices.
Such imitation will likely lead to the homog-
enization of practices and to further empha-
sis on a single central model that becomes a
prototype to be imitated. Even if the dynam-
ics of this mode resemble those of diffusion,
in which a strong central idea or model drives
imitation, imitation in the broadcasting mode
is driven by the active participation,
initiatives, and motives of those doing the
imitating. Both those imitated and those
imitating are active shapers of the process
(Sevón 1996).
March (1999: 199) distinguished between
this broadcasting mode and a chain mode of
imitation. While broadcasting, by definition,
originates in one place and spreads all
around, in chain imitation an idea is imitated,
and then this imitation is in turn imitated, and
so on. This is, in fact, the main mode of imi-
tation as described by Tarde (1890/1962).
The one who is imitating may in fact have no
knowledge of the ‘origin’ of the model; thus
we can sometimes discern only after the fact
that the imitation is part of a larger trend or
development. This process is akin to the one
identified in relation to fashions: fashions
may have no clear initiator, driver or direc-
tion (Czarniawska 2005; Löfgren 2005). The
trend or fashion is created through chains of
imitation and the ensuing translations.
Stressing that imitation may originate from
not only one source or model, this mode of
imitation highlights even further the active
role of those involved in imitation.
The third mode of imitation is one in
which the relationships between those being
imitated and those imitating are mediated by
other organizations and actors. Imitation
does not always proceed from those imitated
to those imitating. Many persons and organi-
zations act as carriers and/or mediators
(Sahlin-Andersson and Engwall 2002). The
usual diffusion perspective, according to
which the diffusion of ideas takes place via
more or less automatic processes, and
according to which the main explanation for
the success of an idea is its original strength,
has likely helped deflect the attention of
scholars from the actual carriers of ideas.
 CIRCULATING IDEAS: IMITATION, TRANSLATION AND EDITING
Attention has instead been directed towards
the local settings where new practices are
found and where ideas are received. A car-
rier’s identity has often been reduced (usu-
ally with the carrier’s cooperation) to an
entity that only reports on what is going on in
various places, but is itself neither an activat-
ing entity nor an actor with influence. For
example, researchers, media, expert commit-
tees, and international organizations are
presumed to report on actions and events
occurring elsewhere, but without taking any
action or pursuing any interests in such
events (such assumptions are demonstrated
and analyzed, but also questioned, by
Finnemore 1996; Barnett and Finnemore
1999; and Sahlin-Andersson 2000).
Those who circulate ideas have been
analyzed as carriers. For some, this concept
may have a somewhat passive association:
someone or something carrying a package, a
passenger, or even a disease. The way the
concept has been used in studies of the circu-
lation of ideas, however, has been to convey
a mix of passivity and activity, of supporting,
transporting, and transforming. Jepperson
(1991) used the carrier concept to point to the
importance of activities to institutional
development. Institutions do not just exist
independently but are enacted in a host of
supporting and reproducing practices. Even
though such activities reproduce and
transform institutions, in highly institutional-
ized situations and settings these activities
are embedded in institutions or they consti-
tute enactments of institutions. Thus, one
should distinguish such activities from
actions: ‘If one participates conventionally in
a highly institutionalized social pattern, one
does not take action, that is intervene in a
sequence, make a statement’ (Jepperson
1991: 148). Hence, both the reproduction and
the alteration of institutions involve activity:
this ongoing activity is directed and limited
by institutions while the activity reproduces
as well as alters institutions (Scott 1995; see
also Giddens 1979; 1984).
In their analysis of modernization, Berger
and associates (1973), highly influenced by
229
Max Weber, focused mainly on what they
termed the ‘primary carriers’ of moderniza-
tion: technological production and the
bureaucratically organized state. However,
the authors identified a multiplicity of
‘secondary carriers’ related to these funda-
ments of modern society that serve as
transmitting agencies for the knowledge and
ideology derived from the primary carriers.
Alvarez (1998: 38) translated the concept in
order to analyze ‘the diffusion and consump-
tion of business knowledge.’ He analyzed
these as secondary carriers and emphasized
that such carriers ‘can attain considerable
autonomy as agents in themselves’ (Berger
et al. 1973: 9).
Along a similar line of conceptualizion,
but using a different terminology, John
Meyer (1994 1996) has used the term
‘others’ (inspired by G.H. Mead 1934) to
capture such carriers with their specific fea-
tures and activities, thereby distinguishing
them from ‘actors,’ who are assumed to
pursue their own interests and policies and
are held responsible for their actions. Even
though ‘others’ may present themselves as
neutral mediators, they engage in activities
that are crucial for the circulation and trans-
lation of ideas. Such ‘other’ organizations not
only mediate ideas, they also influence and
shape the activities that take place under
their auspices, as they ‘discuss, interpret,
advise, suggest, codify, and sometimes
pronounce and legislate [and] develop, prom-
ulgate, and certify some ideas as proper
reforms, and ignore or stigmatize other
ideas’ (Meyer 1996: 244). To analyze how
these ‘others’ translate and mediate ideas,
Sahlin-Andersson (1996; 2000) conceptual-
izes them as editors. These editors not only
report on and transmit ideas and experiences,
but also formulate and reformulate and thus
frame and reshape them in the process.
Moreover, they teach (Finnemore 1996) –
more or less directly – other organizations
how to act in order to be acknowledged as
legitimate.
The three modes of imitation – broadcast-
ing, chain, and mediated – should be
230 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
understood as ideal types: although we will
find one or more of them when we study
processes of imitation, they will not always
appear in their pure, ideal forms. These three
ideal types are also used in analytical frame-
works in imitation studies and, depending on
which framework a particular study uses, one
particular mode of imitation may be singled
out for identification and emphasis. It
appears to us that studies most often describe
the broadcasting or chain modes of imitation;
the mediated imitation mode, focusing on the
web of imitated and imitating actors and
‘others’ who create, modify or circulate
models and ideas to be imitated, has received
less attention. In practice, these three modes
exist together and we have suggested that
such intertwined modes of imitation can
be analyzed as fields of imitation (Hedmo
et al. 2005).
Sahlin-Andersson and Engwall (2002)
used the carrier concept when analyzing
those who are professing, providing, and
circulating management ideas. With the
expansion of carriers such as consultants,
business schools and the media the supply of
management ideas has expanded. Thus,
Sahlin-Andersson and Engwall (2002)
claimed, the intensified circulation and adop-
tion of management ideas among organiza-
tions is largely supply driven. Abrahamsson
(1996) also stressed the role of such carrying
organizations, or ‘others,’ in forming
fashions, naming them a ‘fashion-setting
community’ that continuously identifies
ideas, fashions a discourse that presents these
ideas as rational and progressive, and
markets these back to the management
community. This way, the fashion-setting
community redefines conceptions of what
constitutes rational progress in managerial
practice and produces waves of managerial
fashions (Abrahamsson 1996).
Still we should be careful to avoid letting
this seemingly actor- and action-focused ter-
minology lead us to see only the interactions
and actors. Strang and Meyer suggest that
relational models of diffusion are not enough
to explain the wide distribution of models
and practices in contemporary society.
Relational models of diffusion underspecify
the variety of effects following from direct
interaction and interdependence as channels
of diffusion – thus we need to look beyond
network models of diffusion. They stress
instead that linkages can be cultural – the
cultural understanding that social entities
belong to a common category constructs a tie
between them. Such cultural linkages form
identities and identification that shapes and
directs processes of imitation and change, as
expectations and norms diffuse among actors
within the category or group. Diffusion
within cultural categories is enhanced by
theorization, or the development of abstract
categories and generalized, complex models
and patterned relationships (Strang and
Meyer 1993). Mediating organizations,
again, play important roles in such processes.
Media and professional organizations, for
instance, theorize practices and models for
change, driving organizational as well as
institutional change and development (Rao,
Monin and Durand 2003; Greenwood et al.
2002).
FROM PROTOTYPES TO TEMPLATES
The focus of research has recently turned
from studies of how and why ideas circulate
to studies of what kinds of ideas circulate,
and on how the nature of ideas changes, both
as ideas circulate and as the institutional set-
tings in which ideas spread change. We can
describe this change as a shift in focus from
ideas as prototypes to ideas as templates.
Prototypes are exemplars, models to be
imitated and put into practice. Such proto-
types are typically picked up and edited by
those organizations that want to become, or
be perceived as, successful in accordance
with the exemplary models. So, for instance,
when a number of municipalities developed
their civil services, this became known as a
successful model – or a prototype – to be
imitated and other municipalities followed
 CIRCULATING IDEAS: IMITATION, TRANSLATION AND EDITING
suit (Tolbert and Zucker 1983). Models for
total quality management were associated
with success and thus were picked up by
organizations that wanted to become or
appear successful (Westphal et al. 1997) and,
with reference to Silicon Valley, research
parks became associated with successful
regional development and thus developed
among regional planners into a prototype for
how to enable development and growth
(e.g. Hall and Marcusen 1985; Saxenian
1988; Sahlin-Andersson 1996). We have
shown above that these processes of imita-
tion are largely mediated with consultancies,
media organizations, international organiza-
tions and the like carrying those models from
one setting to another and at the same time
editing them into success models.
More than models and prototypes for spe-
cific imitation, however, templates for
assessing and evaluating practices are also
circulating among organizations and between
contexts. These templates are frames or tar-
gets that actors use to compare or benchmark
their activities, and they prescribe how
success should be assessed. Templates serve
as the currency, the medium of abstraction
used to assess, monitor and present practices.
These can be evaluation criteria, rankings,
standards, or just widespread notions of what
constitutes success that individuals, groups
and organizations aspire to or compare them-
selves with. The formulation and diffusion of
templates shape identities and identification
with a category or group of organizations,
and guide the search for models and organi-
zations to imitate (Wedlin 2007).
Soft regulation and governance
This change in research focus from proto-
types to templates has primarily been trig-
gered by empirical observations. The most
fashionable and popular organizational ideas
during the 1980s and 1990s largely con-
cerned and strengthened management and
leaders. Slightly different ideas have come to
be most commonly circulating during the
231
new century. Classification systems (Bowker
and Star 1999), standards (Brunsson and
Jacobsson 2000) and rules (March, Schulz
and Zhou 2000) have increased in number
and have been developed and applied across
organizations and around the world (Djelic
and Sahlin-Andersson 2006b). Evaluations
and audits (Power 1997), accounting systems
(Meyer 1994; Olson, Guthrie and Humphery
1998), assessments and accreditation
(Hedmo 2004) and comparisons and rank-
ings (Miller 1996; Wedlin 2006) have all
expanded and become widespread.
Thus focus has shifted from management
to regulation, from an intraorganizational to
interorganizational focus, and from talk of
efficiency to talk of transparency. In general
this shift is clearly following the logic of an
audit society, the early signs of which
Michael Power (1997) pointed out. With an
‘audit explosion’ the logic of the financial
audit has been replicated to new societal
arenas and issues, and it is seen as constitut-
ing a new system of governance that
inculcates ‘new norms and values by which
external regulatory mechanisms transform
the conduct of organizations and individuals
in their capacity as “self-actualizing agents” ’
(Shore and Wright 2000). Thus, this
‘audit society’ is a society where audits
expand into almost all aspects of social life,
and operations and organizations are
increasingly structured in ways that make
them ‘auditable’ (Power 1997; see also
Strathern 2000).
‘Transparency’ along with ‘governance,’
‘flexibility,’ ‘quality,’ and ‘performance’ are
concepts that have spread almost universally.
In parallel with this emerging transparency
regime (Kjaer and Sahlin 2007) are tech-
niques and models for how to respond to
such monitoring. These techniques are ways
of auditing and making auditable – they have
been characterized as transparency technolo-
gies (Blomgren and Sahlin 2007) or, more
commonly, as soft modes of governing and
regulating.
Soft regulations are nonhierarchical rules
that are not legally binding (Mörth 2004;
232 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
2006). Furthermore, such rules are largely
informal and flexible in the sense that they
are open to interpretation and adjustment by
those being regulated (cf. Kirton and
Trebilcock 2004). The domain and applica-
bility of soft rules and the conditions for
compliance are being defined together with
the rules themselves. Authority is not
predefined in the relationships between those
regulated and those regulating, but must be
built into each governing relationship.
Despite much general talk about deregula-
tion, empirical observations point to the
increasing scope and breadth of regulatory
and governance activities of all kinds. The
intensity of the latter, in fact, is such that it
would probably be more accurate, Djelic and
Sahlin-Andersson (2006c) suggest, to talk of
regulatory ‘activism.’ Regulatory activism
can take the form of a re-regulation of certain
spheres that had already been regulated, but
generally at the national level. This is the
case, for example, with education (Morgan and
Engwall 1999), health (Blomgren 2007), labor
markets (Jacobsson 2004) and accounting and
financial reporting (Tamm Hallström 2004;
Botzem and Quack 2006). All of those
spheres are increasingly subject to regulatory
activities and initiatives with a transnational
scope.
Regulatory activism can also take the form
of an expansion into new territories. This is
the case, for example, with environmental
and pollution issues (Frank, Hironaka and
Schofer 2000; McNichol and Bensedrine
2003; Power 2003); ethical, social and envi-
ronmental aspects of corporate activities (e.g.,
Cutler, Haufler and Porters 1999; Kirton and
Trebilcock 2004); the life and rights of
animals (Forbes and Jermier 2002); adminis-
trative procedures (Brunsson and Jacobsson
2000; Beck and Walgenbach 2002) or the
structuring of love and intimate relationships
(Franck and McEneaney 1999). The present
world, indeed, is a ‘golden era of regulation’
(Levi-Faur and Jordana 2005) marked by a
profound transformation of regulatory
patterns (see also Braithwaite and Drahos
2000). We witness both the decline of
state-centered control and the rise of an ‘age
of legalism’ (Schmidt 2004). New regulatory
modes – such as contractual arrangements,
standards, rankings and monitoring frames –
are taking over and are increasingly being
used by states, too (Hood, Scott, James et al.
1999). New organizations, alliances and
networks emerge everywhere. Particularly
salient is the almost exponential growth of
international organizations (e.g. Boli and
Thomas 1999). An important task for many
of these organizations is to issue rules, but
they may also be involved in elaborating and
activating processes to monitor adoption and
implementation of those rules.
Hence, we find that just as fashionable
management ideas circulated more or less
worldwide during the previous decades, the
early 2000s have seen the circulation of
various kinds of regulatory and governing
activities (Drori 2006). These bring templates
for organizing and for evaluating, assessing
and judging practices and procedures. We can
point to organizational as well as institutional
consequences of the new emerging trends.
Before turning to these, however, we need to
say a few more words on the dynamics of the
circulation of templates.
Circulation of templates
The circulation of templates follows some of
the same dynamics as the prototypes – the
management ideas – that featured in the
1980s and 1990s, and still do. They display
patterns of fads and fashion, they are picked
up and displayed as organizations seek to
appear modern and rational, they are
supplied and circulated by many carrying
organizations that look for ways of attracting
resources and attention, and they are per-
ceived as ways for all these many organiza-
tions to seek more central and dominating
positions in their respective fields. Some
consequences of their circulation appear
familiar, too: they add to the elaboration and
increased complexity of organizational
structure, structures that are more or less
 CIRCULATING IDEAS: IMITATION, TRANSLATION AND EDITING
decoupled from the daily operations of those
organizations, and they lead to isomorphism,
at least as long as we look at the formal
organizational structures. However, recent
studies have also pointed to additional
drivers for and consequences of the circula-
tion of these modern ideas.1
On a first level, the expansion of soft
regulations has been shown to be moved
respectively by distrust, the question of
responsibility and the search for control.
Power (1997, 2004, 2007) showed that the
movement towards expanded regulation is
driven in part by a lack of trust. A diffuse dis-
trust generates the need for activities that
reveal, make transparent, and set rules, with a
view to building more trust. Those activities,
however, may in fact not only solve problems
but also reveal and suggest new problems and
new questions. In the process, rather than
building trust, they could be undermining it
further, leading to still more requests for
auditing, monitoring and regulation.
Partly connected to this, we also find a
‘responsibility spiral.’ Governance and regu-
lation are in part about allocation of respon-
sibility. With the multiplication of regulatory
and governance activities, responsibilities
become diffused and dispersed. Furthermore,
the movement towards soft regulation has a
tendency to reroute responsibility away from
rule setters and towards rule followers.
Voluntary rules that are open to translation
mean that those who choose to follow the
rules, and to follow them in certain ways, are
held responsible. This double blurring of
responsibilities may drive the need for
regulation and governance still further, and at
the local level expanded soft regulation may
foster a culture of defensiveness (see Power
2004). Organizational representatives then
have to allocate extended resources, not only
to follow rules but also to explain why they
have chosen to follow certain rules in
particular ways or why they should be held
responsible.
A third mechanism feeding the spiral
revolves around the search for control. Our
present world is in motion with unclear and
233
shifting boundaries and organizations in flux.
There is competition for claims to authority
and the regulatory arena can be described as
a regulatory market – where demands and
offers stimulate and reinforce each other. On
the regulatory market the way to reach con-
trol or to react to regulations that are not
favorable to one’s position and strategy is
essentially to organize and drive a competing
regulatory set-up. In a world where regula-
tion is expanding, the way to seek control is
not by avoiding regulation. Rather, a more
promising strategy is to become actively
involved in issuing and supporting a
satisfactory regulatory scheme.
These drivers partly explain the expansion
of regulations that serve as the templates
related to which organizations and operations
are being judged and assessed. The shape of
such templates, on the other hand, has been
explained by institutional forces that perme-
ate and shape our modern society.
When characterizing these as institutional
forces, we refer to four meanings of ‘institu-
tions.’ First, institutions are constitutive of
actors, interests, relations and meanings; they
push and pull activities in certain directions.
This is precisely why we can conceive of
them as ‘forces’ (cf. Hoffman and Ventresca
2002). Institutional forces should not be
treated as external to the actors, as represent-
ing an environment to which actors are
merely adapting. Second, institutional forces
generally become taken for granted as the
‘natural’ way of being and doing; they
become transparent to the actors themselves
(cf. Douglas 1986). Third, institutional
forces are self-reinforcing (Jepperson 1991).
As these forces shape relations, interests and
bases for activities, the actions taken carry
inscribed meanings and drive activities
further along the same path. Fourth, these
institutional forces constitute the ‘rules of
the game,’ providing frameworks for
judging which behavioral, organizing, dis-
cursive, and interaction patterns are appropri-
ate – thus they may be envisioned as the
meta-templates of the modern organ-
ized world.
234 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
The newly emerging and circulating regu-
latory measures are structured and framed by
the rise, expansion and influence of scientific
discourse throughout the world (Drori,
Meyer, Ramirez and Schofer 2003; Drori and
Meyer 2006). Actors, activities and settings
are largely shaped and authorized in the
name of science. As already pointed out by
Weber (1919/1949), this is accompanied by a
drive for transparency: Science becomes a
paradigmatic umbrella, in terms of which
every aspect of the universe can and should
be interpreted and framed. In line with this
we find that those templates – in the form of
guidelines, standards and assessment criteria
– that are widely circulated are directly sup-
ported by references to science. The best
example of this may be the proliferation of
evidence-based models. Such models were
first circulated in relation to medical treat-
ment (Hult 2006) but have lately spread to
all areas of modern life. Arguments have,
for example, been raised for the need for
evidence-based management (Pfeffer and
Sutton 2006).
A second institutional force that underpins
the expansion, circulation and shape of soft
regulatory measures is marketization (Djelic
2006). In about a century, market logics have
moved from reflecting marginal ideas in a
few liberal intellectual centers to becoming a
structuring force of the world. Western soci-
eties, at least, are being marketized to the
extent that markets are not only framed as
superior arrangements for the allocation of
goods and resources in every sphere of eco-
nomic, social or even cultural and moral life,
but are also increasingly defined and per-
ceived as the ‘natural’ way to organize and
structure human interactions (Djelic 2006).
Today we find that marketization permeates
and structures policies, reforms, discourses
and ideologies in many places in the world.
This progress of marketization comes,
furthermore, under a highly scientized guise,
particularly reflected in the professionaliza-
tion of economics. A common argument for
transparency is that markets, in order to
function well, demand it.
Organizing is a third institutional force.
Organizing, which in the present context is
defined as the almost universal reliance on
formal organizational structure to order
social relations, achieve particular goals, or
solve particular problems, has resulted in
what may be termed ‘the organized society’
(Perrow 1991, 2002), a society in which
formal organizations become the key vehi-
cles for governance and social order (see also
Ahrne and Brunsson 2006). As such, organ-
izing is also a way to manage risk and uncer-
tainty (Power, 2007). Again the prevailing
ideal of organizing is to order by making
tasks, roles, and relations explicit and subject
to formal description. This shapes a demand
for classifica-tions, guidelines, rules and
scrutinizing measures.
A fourth institutional force has been
termed moral rationalization (Boli 2006),
the widespread assessment and celebration of
what is good or bad, excellent or insufficient –
usually based on moral judgments and
expressed in ranking lists, prizes, records,
credentials and celebrations, published
naming and shaming and the like and backed
up by a rationalized moral order that assumes
basic cognitive and normative judgment
criteria.
Finally, there is the urge towards rein-
vented democracy, heavily emphasizing
deliberation and thus the need for open
accounts and open dialogues. Our world is,
as Mörth (2006) has convincingly shown,
increasingly permeated by a view of democ-
racy that emphasizes dialogue and delibera-
tion and the autonomy of participating
actors. With this institutional development,
we find a widespread quest for accounts and
information on which participants in this
deliberation can act, and with which partici-
pants can be invited to take part in dialogues.
Not only does this institutional development
foster an increase in the quest for information
on business developments as well as on all
other aspects of society, but, in order for the
deliberation to actually form into a dialogue,
there is a quest for critical scrutiny and for
multiple perspectives on developments.
 CIRCULATING IDEAS: IMITATION, TRANSLATION AND EDITING
The editing of corporations
Together the institutional forces described
above foster the proliferation and circulation
of rules, standards, classification schemes,
evaluation procedures, rankings and monitor-
ing that form an audit society (Power 1997),
audit culture (Strathern 2000), transparency
regime (Kjaer and Sahlin 2007) and golden
era of regulation (Levi-Faur and Jordana
2005). With this changed nature of proliferat-
ing ideas we find that the main logics of
organizations appear to change too. The
changed organizational logics that follow
those institutional changes have not attracted
as much scholarly attention as has the issue
of how new ideas emerge and proliferate –
how institutional change comes about.
However, studies from various research
traditions point to a few tendencies of organi-
zational changes that follow the institutional
changes that we have portrayed above. We
can particularly note how organizations
become increasingly occupied with
presenting themselves in ways that clearly
remind us of those ways of ‘the presentation of
self’ that were highlighted by Goffman (1959;
see also, e.g., Ramirez 2006; Power 2007).
Empirical studies of fields such as health
care and management education have
emphasized the importance of monitoring
organizations, such as accreditation bodies
and media, in creating and circulating
templates within fields (Erlingsdottir and
Lindberg 2005; Hedmo, Sahlin-Andersson
and Wedlin 2006 Wedlin 2006). These have
provided categories and measures on the
basis of which activities and organizations are
compared, monitored, and assessed (Hedmo
et al. 2005). It was particularly noted that the
entrance of these mediating bodies was
followed not only by more imitation among
organizations but also by an enhanced
emphasis on self-presentation. The rules set
by the monitoring bodies regulate what is
considered to be good and appropriate
self-presentation, and they also frame and
structure how the audience views the
self-presentations. Organizations engage in
235
producing and editing presentations of them-
selves and their performance in light of such
standard criteria for evaluation and descrip-
tion (Corvellec 1997; Pallas 2007). With this
increased attention to self-presentation
follow changes in organizational structure.
Studies of corporate branding (Schultz,
Antorini and Csaba 2005), of corporate
expressiveness (Hatch and Schultz 1997) and
of corporate reputation (Fombrun 1996;
Deephouse 2000; Pollock and Rindova
2003), as well as daily reports on the way
corporations are traded and valued on the
stock markets worldwide, all seem to reveal
the central importance of the way corpora-
tions are presented and conceptualized. In
fact, many would claim that brands and
presentations are the core of many modern
corporations. The way in which corporations
are presented and monitored by the media
may thus have a direct effect on their
finances, their development and even their
survival (cf., Jonsson 2005). Power (2007)
showed that reputational risk has become a
central management concern and he demon-
strated the many ways in which organizations
govern reputation.
We have suggested the term ‘edited corpo-
ration’ to emphasize this (Engwall and Sahlin
2007). The activities of organizations are
increasingly geared, as described above, to
the editing of texts picked up by the organi-
zation from the environment – management
ideas, market information, news of competi-
tors, and so on – or texts about the company
intended for its stakeholders or for other
uses. Further, the term ‘editing’ suggests the
presence of reciprocal processes in which
several individuals and units inside and
outside the corporation interact with one
another. Moreover, such texts are shaped – in
fact, edited – according to those circulating
templates that we discussed above.
The edited corporation, then, is a corpora-
tion that is clearly embedded in and dependent
upon circulated templates; it is a corporation
in which a great many activities are devoted
to editing work, and to managing and organ-
izing for this embeddedness. The edited
236 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
presentation of an organization and its activ-
ities is not directed at an external audience
only. The templates also function as mirrors
of organizational activities, whereby the
edited organization appears in an
auto-communicative process in which activi-
ties are presented in external assessments,
rankings, media, audits, etc., which in turn
informs people in the organization about
their own situation and operations.
As organizations, groups and individuals
categorize, give accounts of their activities,
and benchmark themselves in relation to
templates, forming themselves according to
the templates, these efforts can drive institu-
tional change. But rather than serving as
direct blueprints or models to be imitated or
adopted, these templates shape identities and
identifications of organizations and groups
that can lead to ‘identity-movements’ that in
turn significantly alter institutional logics or
practices (cf. Rao et al. 2003). The result of
such change, however, is not necessarily or
exclusively an increasing homogenization of
organizational structures or activities. Rather,
studies have noted both compliance and
resistance to isomorphic pressures intro-
duced by new evaluation and assessment sys-
tems (Townley 2002), and have shown how
templates provided by monitoring activities
leave substantial room for diverse interpreta-
tions and local identity formation processes,
thus mediating isomorphic pressures (Wedlin
2007). We can thus expect, and have
observed, both similarity and difference to
follow from the circulation and formulation
of templates. This is in line with contempo-
rary writings on institutional change, show-
ing differential responses to new evaluation
mechanisms, performance measures and pro-
fessional standards that produce both stabil-
ity and change in organizational practices
and routines (Casile and Davis-Blake 2002;
Greenwood et al. 2002; Townley 2002).
In this section we have described and
discussed a shift from prototypes to
templates. This, however, should not be
understood as meaning that prototypes are no
longer circulating. However, the prevalence
of monitoring and scrutinizing activities
of the kind described above opens spaces for
the circulation of prototypical models
for how those scrutinized organizations can
be improved relative to the template meas-
ures. Thus, with this shift we find a more
densely populated institutional and organiza-
tional landscape. Again studies have most
clearly pointed to the emergence of new and
increasingly complex institutional structures
and procedures. A critical remark that has
been made about much of organizational
institutionalism can be repeated relative to
the present studies: what is the limit? Which
forces drive in the opposite direction?
Obviously there need to be some counter-
forces working against intensified circula-
tion, deinstitutionalization and variation, but
these are only rarely discussed in studies of
institutionalization processes. Even if the
Scandinavian studies reviewed in this chapter
have sought to address these issues by
looking more closely at the dynamics of insti-
tutionalization and circulation, many intrigu-
ing and difficult questions about limits to
institutionalization, deinstitutionalization and
deregulation remain largely unanswered.
NOTES
1 The following section about drivers for
expanded regulation builds substantially on Djelic
and Sahlin-Andersson (2006b and c).
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Organizational Implications of
Institutional Pluralism
Matthew S. Kraatz and Emily S. Block
Hence, social control, so far from tending to crush
out the human individual or to obliterate his self-
conscious individuality, is, on the contrary, actually
constitutive of and inextricably associated with
that individuality; for the individual is what he is, as
a conscious and individual personality, just in so far
as he is a member of society.
(Mead, 1934: 255)
Institutional pluralism is the situation
faced by an organization that operates within
multiple institutional spheres. If institutions
are broadly understood as ‘the rules of the
game’ that direct and circumscribe organiza-
tional behavior, then the organization con-
fronting institutional pluralism plays in two
or more games at the same time. Such an
organization is subject to multiple regulatory
regimes, embedded within multiple norma-
tive orders, and/or constituted by more than
one cultural logic. It is a participant in multi-
ple discourses and/or a member of more than
one institutional category. It thus possesses
multiple, institutionally-derived identities
which are conferred upon it by different seg-
ments of its pluralistic environment.
An ideal-typical example of such an organi-
zation is the American research university.
Clark Kerr well-captured the pluralistic
9
character of these organizations when he
observed that the American university is
‘so many different things to so many different
people that it must, of necessity, be partially
at war with itself’ (Kerr, 1963: 8). In the uni-
versity, as in many other organizations, it is
the broader, heterogeneous institutional
environment that imposes these multiple
identities, makes these disparate demands,
and thus generates these persistent and
deep-rooted tensions within the organization
itself. Because the pluralistic organization
is a unit of multiple institutional systems,
its internal functioning reflects the
contradictions between the larger systems
themselves.
Prior empirical research has uncovered
numerous instances of organizations facing
institutional environments which appear to
exert pluralistic demands. These include
hospitals (D’Aunno, Succi & Alexander,
2000; Denis, Lamothe & Langley, 2001),
neo-natal intensive care units (Heimer,
1999), rape crisis centers (Zilber, 2002), drug
treatment centers (D’Aunno, Sutton & Price,
1991), non-profit and public organizations
(Brunsson, 1989; Dutton & Dukerich, 1991;
Stone & Brush, 1996), universities (Albert &
244 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Whetten, 1985; Cohen & March, 1986),
public schools (Rowan, 1982), public broad-
casters (Powell, 1988), arts organizations
(Mouritsen & Skaerbaek, 1995; Alexander,
1996), Taiwanese computer firms (Hung &
Whittington, 1997), multi-national firms
(Kostova & Zaheer, 1999) and small busi-
nesses (Pickle & Friedlander, 1967). Much
recent research in stakeholder theory,
which has increasingly drawn from neo-
institutionalism, also emphasizes that corpo-
rations, in general, are properly viewed as
pluralistic entities (Donaldson & Preston,
1995; Mitchell, Agle & Wood, 1997).
However, despite this common awareness of
the existence of institutional pluralism, there
has to date been little apparent effort to sys-
tematically assess its practical and theoretical
implications. What are the characteristic
challenges and opportunities faced by organ-
izations that operate in pluralistic environ-
ments? How do organizations typically adapt
to these challenges and opportunities
(structurally, politically, symbolically,
rhetorically)? What broader and more gen-
eral lessons might researchers take away
from the methodical and sustained analysis
of organizations that dwell in pluralism’s
midst? These are the broad questions that we
set out to address in this chapter.
We are especially concerned with
understanding the theoretical and practical
implications of what might be called cogni-
tive, or constitutive, pluralism. The hallmark
of the neo-institutional perspective is its
focus on cognitive institutions that constitute
actors, define social realities and thus shape
organizational behavior in subtle but power-
ful ways (DiMaggio & Powell, 1991;
Friedland & Alford, 1991; Scott, 2001). This
perspective on institutions may, at first
glance, appear to be incommensurable with
the very notion of pluralism. It is relatively
straightforward to envision a pluralistic insti-
tutional environment if we see institutions as
exogenous forces that exert competing
coercive or normative demands on the organ-
ization. Indeed, this is the very picture that
resource dependence theory (Pfeffer &
Salancik, 1978) and more strategic variants
of institutional theory (Oliver, 1991;
Suchman, 1995; Zajac & Westphal, 1995)
seem to present us with. However, it becomes
considerably more challenging to think
about institutional pluralism when we see
institutional effects as constitutive and
ideational; as suffusing the organization
rather than merely impinging upon it.
Nonetheless, we believe that some critical
insights and images begin to emerge when
we embrace pluralism and cognitive institu-
tionalism conjointly. Specifically, we are
able to see an organization that may have
multiple institutionally-given identities, an
organization that may be the structural
embodiment or incarnation of multiple
logics, an organization that may be
legitimated by multiple mythologies, and an
organization wherein very different beliefs
and values might be simultaneously taken for
granted. In short, we see an organization that
may genuinely be, like Kerr’s university,
‘multiple things to multiple people.’
We are interested in understanding how
this is possible. We are also interested in
elaborating pluralism’s positive and negative
consequences for the organization, and in
identifying the factors that tip the balance
between them. Clearly, pluralism creates the
potential for fragmentation, incoherence,
conflict, goal-ambiguity, and organizational
instability (Heimer, 1999; Stryker, 2000). In
an organization with multiple identities, pur-
poses, and belief systems, no group is likely
to be fully satisfied, and political tensions are
likely to be endemic. Such organizations may
even resemble the ‘organized anarchies’ or
‘garbage-cans’ that March and colleagues
vividly described (Cohen & March, 1986;
March & Olsen, 1976). However, we think
that institutional pluralism may create impor-
tant opportunities for organizations as well.
We will suggest that institutionally-adept
organizations are often able to simultane-
ously meet the expectations imposed by var-
ious institutional spheres in which they
operate. Indeed, we see the ability to at least
placate diverse external constituent groups as
 ORGANIZATIONAL IMPLICATIONS OF INSTITUTIONAL PLURALISM
a minimum requirement for bare survival in
the face of pluralism. More importantly, we
also think that significant complementarities
often exist between institutionally given
identities, such that the organization’s ability
to successfully be one thing actually
enhances its ability to be others. Thus,
we try to show how the same institutional
pressures that threaten to divide the organiza-
tion may, at least in some circum-
stances, hold it together instead. We focus
much of our attention on the search for these
circumstances.
We organize the chapter around a discus-
sion of three important organizational prob-
lems that have been the focus of much prior
organizational research. These are the prob-
lems of organizational legitimacy, organiza-
tional governance, and organizational
change. We will suggest that conventional
neo-institutional explanations of these three
critical organizational phenomena become
rather problematic when we attempt to apply
them to organizations operating in pluralistic
contexts. More specifically, we will show
that these standard accounts remain neces-
sary, but are no longer sufficient in and of
themselves. In a pluralistic environment,
organizational legitimacy requires symbolic
conformity with cultural norms and expecta-
tions, but also something more and different
than this. In a pluralistic environment, orga-
nizational governance is influenced by
cultural logics that operate at the field level,
but is in no sense determined by these logics.
In a pluralistic environment, organizational
change is also compelled and constrained by
field-level institutions. But, these institutions
combine with one another to yield variations,
unintended consequences, and myriad oppor-
tunities for organizational action and contin-
uous change. In developing our arguments,
we will draw heavily on examples from
American colleges and universities, but we
will also produce examples from numerous
other contexts. We believe that institutional
pluralism is a variable feature of organiza-
tional environments, and one that is particu-
larly prominent in American higher education.
245
But, we also believe that baseline levels
of pluralism are higher than commonly
thought in many other settings. Thus,
we hope that the chapter’s insights will apply
well beyond the contexts from which they
primarily emanate.
The perspective that we develop on organ-
ization–environment relationships in plural-
istic contexts draws from several key
sources. The first of these is James March’s
institutionalism (e.g. March, 1994, 1999;
March & Olsen, 1995, 2004). His work con-
verges with other neo-institutionalist thought
in seeing institutions as basically constitutive
of actors and their actions. Specifically, he
suggests that much organizational decision
making results from an obligatory ‘logic of
appropriateness’ rather than a calculative
‘logic of consequence.’ Actors following a
logic of appropriateness obey institutional
rules and strive, often preconsciously, to ful-
fill the obligations that are inherent in their
institutionally given identities.1 But March
also stresses that actors possess multiple
identities as a direct result of their multiple
institutional memberships. His theory is thus
(at least implicitly) a pluralistic one.
Our perspective is similarly influenced by
sociological theories of identity that have
emerged within the symbolic interactionist
tradition (e.g., McCall & Simmons, 1978;
Stryker, 1980, 1987; Stryker & Burke, 2000;
Stryker & Serpe, 1982). These theories offer
explanations that are strikingly similar to
March’s, despite their typical focus on per-
sonal, rather than organizational, identity.
They also offer additional concepts that have
been usefully applied at the organizational
level (Pratt and Foreman, 2000). Stryker,
Burke and other identity theorists parallel
March in arguing that actors are multiply
constituted, receiving their various identities
from different segments of the pluralistic
society they inhabit. However, they augment
March’s perspective by giving explicit atten-
tion to processes of identity verification.
They suggest that actors seek to validate or
affirm their identities through processes of
symbolic exchange with different segments
246 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
of their heterogeneous environments. It is
through these processes that the actor’s
various identities are legitimated (and
de-legitimated) over time. Sociological iden-
tity theorists also provide a useful frame for
understanding intra-organizational identity
conflicts, and for conceptualizing the
processes through which multiple institu-
tionally-derived identities may be prioritized
or integrated within the organization as a
whole. Specifically, they invoke Mead (1934)
in drawing a critical distinction between the
notion of identity and that of self. They
conceptualize the self as the whole entity
which encompasses an actor’s various
socially-given identities. As we will show,
this distinction may be especially useful for
understanding governance amid pluralism. In
particular, we will argue that organizational
governance can be usefully thought of as the
process through which an ‘organizational
self’ selects, prioritizes and/or integrates its
various institutionally-given identities (and
also as the process through which these
identities conjointly construct an organiza-
tional self).
Finally, our perspective on the organiza-
tional challenges and opportunities created
by pluralism also relies heavily on Philip
Selznick’s institutionalism (Selznick, 1949,
1957, 1969, 1992, 1996). Like March and
the sociological identity theorists, Selznick
sees the individual organization’s environ-
ment as politically and ideologically hetero-
geneous. His early research on the Tennessee
Valley Authority vividly reveals the destruc-
tive effects that this heterogeneity can have
inside the organization (Selznick, 1949).
However, he also provides important insights
about how organizations can thrive and
prosper in the midst of institutional plural-
ism, both despite and because of it (Selznick,
1957, 1969, 1992). Most critical among
these insights is his argument that some
organizations can become institutions in
their own right, as they harness the otherwise
discordant forces in their pluralistic milieu.
Selznick argues that such organizations are
able to forge identities which are uniquely
their own, and which integrate and transcend
their various socially-given identities.
Interestingly, he also argues that constituent
demands play a key role in facilitating this
quasi-integrative process (despite their inher-
ently divisive potentialities). Specifically,
Selznick emphasizes that these groups value
cross-temporal consistency and revealed
commitment, in addition to the conformity
which is more typically emphasized in neo-
institutional accounts. Constituencies plainly
want the organization to symbolize its com-
mitments to their particular beliefs and to ful-
fill their material needs. But Selznick
emphasizes that they want it to be self-
consistent, trustworthy and non-opportunis-
tic, as well (i.e. to evince what he called
‘organizational integrity’). We will suggest
that it is this preference which makes possi-
ble the emergence of the autonomous (and
distinctively competent) organizational self
which Selznick first theorized.
Before we progress to our consideration of
the specific problems of organizational legit-
imacy, governance and change, we think that
it may be useful to further clarify our chap-
ter’s purposes and to comment upon its
intended relationship to the extant literature.
Most importantly, we wish to emphasize that
our intent is fundamentally generative, rather
than critical. Though we do identify several
apparent limitations of neo-institutional
accounts, we do this with an eye toward
promoting future research and theory on the
organizational implications of institutional
pluralism (rather than to cast aspersions).
Second, we wish to stress that our efforts at
theorizing are admittedly partial and largely
derivative. We think that the recognition of
institutional pluralism points toward a major
void in our collective understanding of the
relationship between organizations and
institutions. The theory that we put forth here
may constitute little more than a drop in very
large bucket – and not an especially novel one
at that. Virtually all of the ideas we develop
herein are appropriated from somewhere
else (although our reapplication of them
may constitute something of a contribution).
 ORGANIZATIONAL IMPLICATIONS OF INSTITUTIONAL PLURALISM
Finally, we would like to re-emphasize that
our chapter assumes an avowedly organiza-
tion-centric perspective (as its very title
indicates). It is written in the tradition of
Barnard, Selznick, March and Simon,
Thompson and others who viewed the indi-
vidual organization as a proper end of study
in its own right. It diverges (at the outset)
from more recent scholarship that takes a
core interest in field-level dynamics and
overarching institutional systems. Thus, to
the extent that our chapter does criticize neo-
institutionalism, it questions the perspec-
tive’s value as a means to ends that are
not necessarily its own. It also proposes
new ends toward which the theory’s core
insights might be productively re-applied.
Specifically, our chapter pushes toward the
creation of an ‘institutional organizational-
ism’ which is quite distinct from (but poten-
tially symbiotic with) the ‘organizational
institutionalism’ which is the primary focus
of this volume. We hope that the outlines of
this perspective – and the basic need for
it – will become apparent in the following
pages.
INSTITUTIONAL PLURALISM
AND THE PROBLEM OF
ORGANIZATIONAL LEGITIMACY
A natural place to begin our discussion of
institutional pluralism’s theoretical and prac-
tical implications is with the problem of
organizational legitimacy. Organizational
scholars have long viewed legitimacy as a
critical resource for organizations (Parsons,
1956; Pfeffer & Dowling, 1975), and this
focus has intensified with the rise of the neo-
institutional perspective (DiMaggio &
Powell, 1983; Meyer & Rowan, 1977;
Tolbert & Zucker, 1983). Suchman (1995:
574) has defined legitimacy as a ‘generalized
perception or assumption that the actions of
an entity are desirable, proper, or appropri-
ate, within some socially constructed system
of norms, values, beliefs, and definitions.’
247
From a neo-institutional perspective, legiti-
macy primarily involves symbolic conform-
ity with cultural prescriptions and
understandings (Deephouse, 1999; Meyer &
Rowan, 1977; Ruef & Scott, 1998). The per-
spective holds that organizations tend to
adopt various practices and structures in
order to create and maintain this conformity.
Importantly, it sees legitimacy as a source of
action as well as the product of it (Edelman,
1992; Oliver, 1991; Suchman, 1995).
An organization’s institutionally-given
identities create behavioral mandates, and its
actions can be understood as conscious
or unconscious efforts to fulfill these man-
dates. This notion of legitimacy as taken-
for-grantedness parallels March’s logic of
appropriateness.
While we believe that this perspective
provides a necessary and appropriate starting
point for understanding organizational legiti-
macy, we encounter at least three important
problems when we attempt to apply it to
organizations in pluralistic contexts. The first
and least troubling of these is that the plural-
istic organization is compelled to symbolize
its commitment to the norms, values, and
beliefs of multiple social systems. Thus, if
taken-for-granted assumptions are to drive its
actions, they can only do so after a specific
institutional identity has been invoked
(Heimer, 1999). The organization must first
be able to answer March’s troublesome ques-
tion of, ‘who are we?’ before the appropriate
institutional rules or scripts can be activated.
Further, if the organization tries to deliber-
ately pursue legitimacy through strategic
conformity, it can only do so by conform-
ing to multiple sets of institutional rules
and successfully embodying multiple cate-
gorical standards. Given these complex-
ities, it may sometimes be appropriate
to think of the legitimacy of the ‘whole’
organization as the mere sum of the legiti-
macy of its individual ‘parts.’ In other words,
inasmuch as the pluralistic organization
enjoys social approval and acceptance, this
may be the cumulative result of its
successful performance within its disparate
248 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
role identities. Clark Kerr is also reported to
have quipped that his job as the University of
California’s Chancellor was to provide
parking for faculty, football for alumni, and
sex for undergraduates. While it is doubtful
that this comment reflected Kerr’s true
thinking about his role or his university, it
well-reflects an additive, ‘part-focused’ view
of organizational legitimacy.
A second and more difficult problem in
applying the conventional account of
legitimacy is that pluralistic organizations
may not be able to compartmentalize or
separate their different institutional identities
from one another. The organization’s
attempts to comply with the demands of one
constituency are likely to be observed by
others, who may assign very different subjec-
tive values to the same displayed symbols
(Glynn, 2000; Golden-Biddle & Rao, 1997;
Stryker, 2000). In the language of the
symbolic interactionists, organizational
efforts to verify or validate one identity may
invalidate another one (Pratt & Foreman,
2000; Stryker & Burke, 2000). Further,
various internal groups with different consti-
tutive beliefs and disparate notions of ‘appro-
priate’ behavior are likely to come
face-to-face in decision situations,
particularly strategic ones (Glynn, 2000). For
example, hospitals routinely face decisions
wherein their institutionally conferred identi-
ties as professional actors and market actors
are both active. In such situations, the
organization’s efforts to fulfill its fiduciary
duties are likely to engender resistance and
criticism from internal and external
constituencies who identify with the organi-
zation as a professional entity and expect it to
act primarily within this role. Analogously,
financial constituencies also regularly
criticize corporations when they embrace
social responsibilities that appear to fall
outside of their narrow role as profit-making
entities (cf. Friedman, 1970). In situations
like these, organizational actions appear to be
co-produced by multiple identities and/or
co-evaluated by multiple audiences. Such
situations raise important questions about the
actual nature of organizational legitimacy
(Heimer, 1999; Stryker, 2000). Taken-
for-granted beliefs and assumptions obvi-
ously affect these organizational decisions
and influence external responses to them.
But, taken-for-grantedness is clearly not
sufficient as an explanation for these actions
or the reactions they engender.
A final problem with the neo-institutional
account of organizational legitimacy is that
organizations are typically expected not only
to symbolize their agreement with prevailing
beliefs and to act in a culturally appropriate
manner, but also to evince cross-temporal
consistency in their words and deeds. While
the organization may indeed be a prisoner of
a cultural ‘iron cage’ (DiMaggio & Powell,
1983), it is also held ‘hostage to [its] own
history’ (Selznick, 1992: 232). In its search
for legitimacy, it thus faces a ‘commitment
problem’ in addition to the ‘conformity prob-
lem’ which has been our exclusive focus thus
far. Early institutional theorists, including
Commons (1970) and Selznick (1957) well-
recognized this problem and argued that dis-
plays of commitment were critical in
building and maintaining institutions
(Stinchcombe, 1997). They similarly empha-
sized the de-legitimating effects of actions
which violate commitments or otherwise
convey opportunism. This concern with
‘credible commitment’ abides in contempo-
rary perspectives which see organizations
primarily as solutions to collective
action problems (Britton & Nee, 1998;
Ingram & Clay, 2000; Olson, 1965). Neo-
institutionalism, in contrast, says very little
about how consistency and revealed commit-
ment (or lack thereof) might affect organiza-
tional legitimacy over time. Neo-institutional
accounts often do an excellent job of situat-
ing the organization within its broader
cultural context, but they typically extract it
from its own unique history of actions and
transactions in so doing.
This omission is perhaps understandable,
as the commitment problem would appear to
mostly vanish in situations where the organi-
zation and its constituencies are jointly and
 ORGANIZATIONAL IMPLICATIONS OF INSTITUTIONAL PLURALISM
wholly nested within a stable and culturally
homogenous field which is replete with
shared understandings and common scripts.
However, the problem appears to re-emerge
quite dramatically in the presence of institu-
tional pluralism. When an organization is
situated in a pluralistic context, its internal
and external constituencies are likely to
recognize its capacity to abruptly change
direction and reprioritize its identities and
values. They can thus be expected to trust it
only with hesitation, and to be particularly
concerned with gauging its predictability and
reliability. As a result, they may be especially
likely to employ what we will call ‘second
order’ evaluative criteria in assessing its
legitimacy. While they may react positively
when the organization symbolizes its agree-
ment with their values and accommodates
their near-term interests (these being ‘first
order’ criteria), they are also prone to look
for evidence of commitment, trustworthi-
ness, and non-arbitrariness (second order
criteria) in the stream of decisions emanating
from the organization over time.2
Further, and ironically, some first-order
actions may send unintended second-order
signals, such that constituents come to think
less of the organization as a direct result of its
efforts to please them. Love and Kraatz
(2007) provide a rather striking example of
this phenomenon. They show that large
American corporations’ reputations were
badly damaged by their use of the practice of
downsizing during the 1980s and 1990s. The
irony in this finding is that the reputations
they studied were ascribed by stock analysts
(who strongly advocated downsizing and
publicly praised downsizing firms) and by
peer firm executives (most of whom revealed
their approval of the practice by engaging in
it themselves). Love and Kraatz suggest that
downsizing’s negative effect on reputation
occurred because of the negative signals that
it conveyed regarding the trustworthiness and
credibility (i.e. the ‘character’) of these
firms. Downsizing was an attractive and
highly legitimate ‘part’ from the perspective
of analysts and peer executives, but it also
249
smelled of opportunism and thus reflected
negatively upon the ‘whole’ social actors
who employed it.
This counterintuitive finding and interpre-
tation calls to mind Groucho Marx’s famous
comment that he would never join a club that
would have him as a member (presumably
because of the second-order signal that his
inclusion would send about the character of
the club as a whole). More seriously, it also
coheres with a great deal of contemporary
research on the psychology of legitimacy,
which has consistently shown that legitimacy
judgments rest primarily upon perceived pro-
cedural fairness (a second-order criteria)
rather than distributive fairness (a first-order
one) (Tyler, 1990: 2002). It is also consistent
with a vast body of research in other
branches of the social sciences which has
revealed the powerful, emotional and evi-
dently pre-conscious responses that displays
of commitment (and opportunism) can
invoke (Frank, 1988; Hauser, 2006; Nesse,
2001). The upshot is that the organization
seeking legitimacy in a pluralistic context is
likely to face what we will call the politi-
cian’s dilemma, a conundrum which results
from the interplay of the conformity and
commitment problems. Constituents
obviously want the organization (and the
candidate) to espouse their values and to
pursue policies that further their particular
interests. But, they are also attracted to
revealed commitment and integrity, and
repulsed by obviously opportunistic
and arbitrary acts. In other words, they are
inclined to pass judgment not only upon the
legitimacy of organizational identities, but
also upon the legitimacy of (what at least
appear to be) organizational selves. They
evaluate the organization not only as a part of
some socially constructed system of mean-
ings and rules, but also as a social actor
(which is what its divided social context
appears to make it into).3
We see at least four basic ways in which
organizations may adapt to pluralistic legiti-
macy criteria. The most obvious effect of
inconsistent expectations is to engender
250 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
resistance and conflict in and around the
organization. In other words, many organiza-
tions adapt to pluralism by trying to elimi-
nate pluralism. The organization’s leaders
may, for instance, deny the validity of vari-
ous external claims that are placed upon it,
attack the legitimacy of the entities making
the claims, attempt to co-opt or control these
entities, and/or try to escape their jurisdiction
or influence altogether (Oliver, 1991; Pfeffer
& Salancik, 1978; Suchman, 1995). They
may, in short, attempt to ‘delete’ or marginal-
ize some of the institutional identities and
attendant obligations that constituencies seek
to impose upon their organization (Pratt &
Foreman, 2000). A similar dynamic may play
out among internal constituencies, irrespec-
tive of managerial influence. Groups that
identify with the organization for one reason
and advocate a particular organizational
ideology may try to banish or permanently
suppress other groups and belief systems
(Selznick, 1949). They may, in fact, succeed
in this task, effectively shedding identities
and eliminating some of the pluralistic
demands that initially gave rise to the con-
flict. We shall discuss these possibilities in
more detail in the subsequent section, as we
explore pluralism’s implications for organi-
zational governance. For now, we will only
note that while no organization can be all
things to all people, efforts to completely
eliminate, silence, or marginalize constituen-
cies may prove self-defeating in the long run.
We suspect that the effective management of
pluralism may be a critical organizational
(and managerial) capability. Its relative
scarcity may be one reason why most
organizations do not survive very long.
A second approach to adapting to pluralis-
tic legitimacy standards is to ‘compartmen-
talize’ identities and relate independently to
various institutional constituencies (Pratt &
Foreman, 2000). The organization may do
this by sequentially attending to different
institutional claims, and/or by creating sepa-
rate units and initiatives that demonstrate its
commitment to the values and beliefs of
particular constituencies. Such initiatives are
often viewed as being decoupled from the
core of the organization, or as merely
symbolic, rather than substantive in nature
(Lounsbury, 1999; Meyer & Rowan, 1977;
Westphal & Zajac, 1994, 1998). While such
characterizations are sometimes apt, we
think there may be a need for caution in
drawing these conclusions in pluralistic
organizations. We do not see how one can
invoke the concept of decoupling without
presuming to know the organizational ‘core’
from which a thing is decoupled. It seems
likewise problematic to describe something
as merely symbolic unless we know where
true substance resides. As we have already
seen, this is a difficult trick in the pluralistic
organization, with its multiple cores, diverse
identities, varied substances, and complex
symbolisms. Practices that are highly periph-
eral and inconsequential to the identity of
one constituency may be all-important to the
identity and values of a different one.
Intercollegiate athletics in American
higher education seem to provide a
compelling example along these lines. It is
quite difficult to grasp the importance (per-
haps even the existence) of ‘big time’
college sports when we view the university
as an organizational device for accomplish-
ing its stated goals of knowledge creation
and dissemination. Excellence in quasi-
professional athletic endeavors is not men-
tioned in the mission statement of any
university that we know of, and athletic
departments often seem to be formally cut
off from the rest of the university’s structure.
Nonetheless, athletics are, empirically
speaking, a central part of most American
universities’ identities. For better or worse,
the majority of people who identify with
universities at all, identify with them through
their sports teams. Further, these identifica-
tions are often intense ones that have major
implications for university policy and
resource allocations. And, while it may be
quite easy for many faculty members to
imagine a university without football, it is
likely the single most taken-for-granted part
of the organization from the perspective of
 ORGANIZATIONAL IMPLICATIONS OF INSTITUTIONAL PLURALISM
other influential constituencies. (One some-
times wonders if society at large would even
permit our universities to exist without it.) In
sum, while college sports may be entirely
beside the point from an academic perspec-
tive, we do not think they can be accurately
classified as peripheral or decoupled. Loose
coupling would seem to be a more suitable
concept to describe the evident reality of the
situation, as this concept does not stipulate
the existence of a single organizational core
(Orton & Weick, 1990; Weick, 1976).
The example of intercollegiate athletics is
also useful in demonstrating the limitations
of loose coupling as an adaptation to plural-
ism. Because athletic and academic purposes
are often almost entirely incommensurate
with one another, the operative goals pursued
by athletic and academic constituencies are
frequently at odds. Because athletic depart-
ments are often structurally and financially
autonomous, they are also prone to make
decisions that offend academic sensibilities
and interests (e.g. massive investments in
athletic facilities and multi-million dollar
coaching salaries). Finally, because academic
and athletic cultures are so vastly different
(and sometimes hostile to one another), fac-
ulty and administrators are often reluctant to
engage athletic issues directly. This reluc-
tance perpetuates and exacerbates existing
rifts (Bowen & Levin, 2003; Shulman &
Bowen, 2001; Duderstadt, 2000; Zimbalist,
1999).
A third category of adaptations to plural-
ism aims at reining in such tensions.
Specifically, organizations may also try to
balance disparate demands, play constituen-
cies against one another, and/or attempt to
find more deeply cooperative solutions to the
political and cultural tensions which plural-
ism creates (Donaldson & Preston, 1995;
Oliver, 1991; Pratt & Foreman, 2000).
As with loose coupling, these adaptations
may result from strategic managerial action
or emerge more naturally from the interac-
tions of constituent groups. A degree of
internal balance may evolve, for instance, as
one constituency grudgingly acknowledges
251
its mutual dependence upon another. This
may partially describe the relationship that
many athletic departments have with the uni-
versities that house them. Some athletics
departments seemingly tolerate academic
standards without embracing them, and
many faculties appear to feel similarly with
respect to sports (i.e. to view them as a nec-
essary evil). The same general sort of rela-
tionship sometimes seems to exist between
the research and teaching identities within
business schools. The line separating situa-
tions of reluctant mutual acceptance from
those of true cooperation is not an especially
bright one. We can certainly find specific
examples of situations wherein athletics and
academics (or teaching and research) are
mutually facilitative. Some corporations also
seem able to find true complementarities
between their social responsibilities and their
duties to their shareholders (Hillman
& Keim, 2001). Nevertheless, tensions abide.
Relationships that are cooperative in their
effect may remain quite conflictual in their
process (and vice versa). Balances that are
struck among various objectives, constituen-
cies, and role identities are often precarious
(Clark, 1956; Selznick, 1951).
This leads us to the final form of organiza-
tional adaptation which pluralistic legitimacy
imperatives may produce. Specifically, it is
possible that some organizations may be able
to forge durable identities of their own and to
emerge as institutions in their own right. To
the extent that this occurs, many of the orga-
nizational legitimacy problems mentioned
above may be mitigated, transformed, or
even eliminated. An organization that
becomes an institution may assume a ‘social
fact’ status, become a valued end in its own
right, and thus become capable of legitimat-
ing its own actions, within limits (Goodstein,
Blair-Loy & Wharton, 2006). It may become
a self-directing entity which is not only a cul-
tural product, but also a producer of culture
(Pedersen & Dobbin, 2006). In the language
of relational sociology, it may attain ‘entita-
tivity’ (Campbell, 1958; Emirbayer, 1997)
and become a ‘thing with consequences’ or a
252 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
‘site of causation’ (Abbott, 1996: 873;
Emirbayer, 1997: 304; White, 1992). It may
also obtain the ability to integrate or some-
how transcend the individual identities which
compose it, and which are imposed upon it
from without (Padgett & Ansell, 1993;
Padgett, 2001).
Selznick (1957) provides one important
account of how this might occur within the
pluralistic organization. As we have noted, he
is keenly aware of the problem of pluralism,
and he sees institutionalization as a dynamic
and natural response to the ‘anxiety-laden
problems’ (1957: 39) which pluralism
creates. In his view, the end result of institu-
tionalization is the emergence of an
autonomous and unique ‘organizational self’
(1957: 21). This self possesses its own pur-
poses and distinctive competencies, and it is
valued as an end in its own right, rather than
a mere means for achieving pre-existing or
externally-given ends. Importantly though,
Selznick does not see institutionalization as a
process that somehow extracts the organiza-
tion from its constraining external context, or
as one that negates the local identities and
parochial aims of its constituencies. To the
contrary, he paradoxically argues that the
organization’s acceptance of ‘irreversible
commitments’ is the very cornerstone of
institutionalization. He likewise sees institu-
tionalization as a largely bottom-up (or
outside-in) phenomenon. The Selznickian
organizational institution is ‘infused
with value’ by its constituents and it is
institutionalized only in so much as it
becomes the vehicle through which these
groups pursue their aspirations and
their ideals. While it develops a logic
of its own and attains the ability to give
identity to its members, it accepts identities
and logics from them in at least equal
measure.
Accepting binding commitments and
effectively surrendering to one’s constituents
would not appear at first glance to be a prob-
able path to autonomy, distinctiveness, and
organizational selfhood (much less
adaptability, another presumed benefit of
institutionalization which we will discuss
below). However, Selznick’s would-be
institution appears to gain much in return for
essentially giving itself up. What must be
recognized, we believe, is: (a) that it makes
multiple binding commitments; and (b) that
these commitments are profoundly symbolic,
as well as material. While no organization
can realistically be all things to all people at
all times, this may be precisely the point.
Because the Selznickian institution makes
itself the receptacle for the ideals of multiple
groups and a vehicle for the realization of
multiple identities and purposes, it acquires
(of necessity) the capacity to reprioritize and
reinterpret ‘its’ identities, ideals, and
purposes as circumstances dictate. It also
acquires the moral authority (i.e. the legiti-
macy) to make reciprocal claims upon con-
stituent identity groups. It makes these
claims on behalf of the organizational whole
(i.e. self) which is, somewhat miraculously,
conjured into existence as a result of the
binding, constitutional commitments that the
organization makes to its various parts. In
other words, by agreeing unconditionally to
be both ‘this and that,’ the organization may
somehow become ‘the other,’ as well.
Because its diverse constituents perceive the
institution to be ‘theirs’ in some fundamental
sense, they come to value it as an end in itself
and thus imbue it with purpose and meaning.
We think it is important to emphasize the
critical role of symbolism in this hypothe-
sized process. If constituencies were sharply
and solely focused upon the tangible outputs
and near-term objectives of the organization,
creating and sustaining cooperation amid
pluralism might well be impossible.
However, people’s tolerance of (or even
preference for) symbolic displays of commit-
ment and conformity may help things hold
together. Symbolism, in short, may be what
allows an organization to be multiple things
to multiple people (Ansell, 1997; Padgett &
Ansell, 1993; Zajac & Westphal, 2004). It
may enable the creation of a ‘coalition of
identities’ that is more robust and more sus-
tainable than a mere coalition of interests
 ORGANIZATIONAL IMPLICATIONS OF INSTITUTIONAL PLURALISM
could realistically be. It is also important to
note, again, that ‘mere’ symbolism is not suf-
ficient according to Selznick’s account.
While robust symbols can evoke powerful
meanings and provide the institution with
needed autonomy, its commitments must be
‘embodied’ and acted out if they are to
engender the reciprocal commitment
necessary to sustain the institution over time
(Stinchcombe, 1997). In other words,
second-order legitimacy criteria continue
to be critical. Obvious disconnects between
rhetoric and subsequent actions are the very
antithesis of organizational integrity, and
can be expected to damage legitimacy
accordingly.4
INSTITUTIONAL PLURALISM AND
THE PROBLEM OF ORGANIZATIONAL
GOVERNANCE
We are also interested in understanding plu-
ralism’s implications for organizational gov-
ernance. Governance, broadly conceived, has
to do with questions of organizational
purpose and control (Hansmann, 1996;
March & Olsen, 1995; Selznick, 1992;
Williamson, 1996). Studies of governance
are thus generally concerned with identifying
‘who rules’ organizations, with understand-
ing the ends toward which they are ruled, and
with analyzing the means (e.g. incentives,
structures, informal norms) employed
to achieve those ends. Questions about the
processes through which control and purpose
are decided and changed over time are also
integral to the study of organizational
governance.
Given that institutions are, among many
other things, mechanisms of governance, it is
not surprising that institutional theories of all
types have been widely applied in the effort
to explain governance phenomena. The main
message of neo-institutionalism as regards
organizational governance appears to be
twofold. First, and most basically, the theory
draws attention to the fact that a great deal of
253
governance takes place outside the bound-
aries of individual organizations (Fligstein,
1991; Friedland & Alford, 1991; Scott, Ruef,
Mendel & Carona, 2000; Thornton &
Ocasio, 1999). Governance, from a neo-
institutional perspective, is largely (not
exclusively) a field-level phenomenon.
A now vast body of research has shown that
the state, the professions, and other field-
level entities profoundly influence the
control structures, practices, and even basic
purposes of individual organizations
(see Scott 2001 for a review). Second, the
perspective emphasizes that much
governance work (perhaps most of it) is
actually done by cultural or cognitive mech-
anisms, rather than the coercive, interest-
based, or value-based ones featured in other
institutionalisms (DiMaggio & Powell,
1991). Shared beliefs and understandings are
thought to effectively determine much of
what goes on in organizations from day to
day, and even to deeply influence fundamen-
tal decisions about the organization’s control,
identity, and reason for being (Friedland &
Alford, 1991; Greenwood & Hinings, 1993;
Hinings, Greenwood, Reay & Suddaby,
2004; Thornton & Ocasio, 1999).
Neo-institutional insights regarding orga-
nizational governance have manifested them-
selves in a variety of ways. One influential
strand of empirical research has demon-
strated that organizational purposes and con-
trol structures are transformed over time as
the result of broader, historical shifts in insti-
tutional logics (Dobbin, 1994; Fligstein,
1991; Lounsbury, 1999; Scott et al., 2000;
Thornton and Ocasio, 1999). A second group
of studies has emphasized the essentially
cultural nature of organizational forms.
This work invites us to see organizational
forms as the embodiments or incarnations of
institutional logics, and argues that cultural
understandings imprinted in organizational
forms at the time of founding continue to
constrain organizations throughout their lives
(Dobbin & Dowd, 1997; Haveman & Rao,
1997; Rao, 1998; Rao, Monon & Durand,
2003; Schneiberg & Bartley, 2001). A third
254 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
manifestation is evident in neo-institutional
studies of organizations’ legal environments.
This research suggests that laws are often
‘endogenous’ to organizational fields, and
raises doubts about coercive or functionalist
explanations of the law’s effect on organiza-
tions. Rather, it presents legal compliance as
a ‘special case of institutional isomorphism,’
and suggests that laws typically govern
organizations through mechanisms that are
primarily cultural and constitutive (Edelman,
1990, 2002; Edelman and Suchman, 1997;
Kelly & Dobbin, 1998; Sutton & Dobbin,
1996). Finally, the neo-institutional perspec-
tive on governance is also much evident in a
growing number of studies which examine
how social movements both create and trans-
form field-level institutions. This research
suggests that new cultural frames and
governing logics wrought by social
movements are instrumental in creating,
transforming, and/or extinguishing individ-
ual organizations and organizational
forms (Davis & Thompson, 1994; Davis,
McAdam, Scott & Zald, 2005; McAdam
& Scott, 2005; Rao, Morill & Zald, 2000;
Zald, Morill & Rao, 2005; see also
Schneiberg & Lounsbury, Chapter 27 this
volume). This view of organizational
governance represents a major break from
earlier theories that tended to see the organi-
zation as an unstable coalition of local inter-
ests, with goals and internal power balances
that are primarily determined by shifting
resource dependencies in the task environ-
ment (Cyert & March, 1963; March
& Simon, 1958; Pfeffer & Salancik, 1978).
The elaboration of field-level governance
processes represents a major accomplish-
ment of neo-institutionalism. Its demonstra-
tion of the importance of cultural and
cognitive governance mechanisms is equally
impressive. Even institutional economists are
now inclined to recognize the importance of
such mechanisms (North, 1990). However,
the reality of institutional pluralism appears
to render neo-institutionalism incomplete as
an explanation for organizational governance,
as well as for organizational legitimacy.
If multiple logics are active in and around
an organization, then no single belief
system can automatically perpetuate its
dominance. If various constituencies hold
different notions about the ‘appropriate’
allocation of power, then something else
besides a simple logic of appropriateness
would seem to ultimately determine who
rules the organization. If the organization
claims multiple, institutionally defined
identities and purposes, it would seem that
its governance must (at least minimally)
accommodate and validate these disparate
identities and purposes. In short, it appears
that the recognition of pluralism leads to
the re-emergence of some basic political
and structural problems that appeared to
fade from significance with the rise of neo-
institutionalism.
We do not think that an organization which
is simultaneously embedded in multiple sys-
tems of governance can be adequately under-
stood as a unit of any one of those systems. It
is, at the least, a functioning part of each
respective system. It is at most a system quite
unto itself, as the preceding section showed.
In either case, much governance activity
clearly goes on within the pluralistic organi-
zation. It is responsible for internally settling
issues that are unsettled within the broader
environment. Further, because it possesses
multiple objectives and diverse constituen-
cies, its overall purposes are subject
to change (perhaps extreme change) over
time. Cognitive mechanisms would also
appear to be insufficient as explanations for
the control of such an organization. When
one set of taken–for-granted beliefs con-
fronts an alternative one, ‘legitimacy
politics’ (Stryker, 2000) are likely to ensue
within the organization. Organizational
structures and rules seem necessary in order
to contain and channel these processes. This
need seems particularly acute within those
organizations that sit upon cultural and
societal fault lines, as inter-identity tensions
are likely to be very deep-rooted and
recurrent in such settings. The control of
such organizations is likely to ‘circulate’
 ORGANIZATIONAL IMPLICATIONS OF INSTITUTIONAL PLURALISM
between identity groups over time as a result
of political processes (Ocasio, 1994; Ocasio
& Kim, 1999). Persons who can credibly
claim membership within more than one
group may enjoy particular advantages in
these perennial internal contests for control
(Burt, 1992; Lazega, 2001; Padgett &
Ansell, 1993).
Each of the organizational adaptations that
we described in the prior section can be
rightfully seen as approaches to organiza-
tional governance, in addition to being strate-
gies for pursuing legitimacy in the face of
pluralism. Attempts to delete institutionally-
given identities, to loosely couple them,
or to balance them against one another are all
different ways for a pluralistic organization
to cope with the twin problems of deciding
organizational purpose and control.
The Selznickian institutionalization process
can be seen in the same light, and this
adaptation merits additional discussion under
the governance rubric.
We think that the single most important
feature of the pluralistic organization may be
its inchoate capacity to govern itself – and its
parallel ability to develop a self which
becomes the focal point of its
governance efforts. More tangibly, the plural-
istic organization has the capacity to
constitute itself by choosing its identities and
commitments from the menu of choices pre-
sented by its would-be constituencies, and by
society at large. This is an opportunity which
is clearly not available to the organization
that is a mere incarnation of an externally
given cultural logic, or which is otherwise
imprisoned within the iron cage of a monis-
tic and totalizing institutional field. The
pluralistic organization similarly has the
opportunity to gain autonomy from its
constituencies, to reprioritize its identities as
needed, and to arbitrate between the claims
of the identity groups that jointly constitute
it. Perhaps most importantly, it may also
obtain the ability to harness and channel the
divergent energies of these constituencies.
Under all circumstances, these groups can be
expected to coexist somewhat uneasily as the
255
mere result of their divergent beliefs, values,
and near-term objectives. But, in the ideal
circumstance, the substance of intergroup
conflict may shift away from narrow
questions about what the organization should
do or provide, and toward larger (i.e. second-
order) questions about what it should be and
aspire to. The focus of conflict may simulta-
neously shift from near-term concerns to
long-term ones. As these shifts occur, the
organization may begin to become an end in
itself, and thus an institution in its own right
(Selznick, 1957, 1969, 1992, 1996). Ongoing
conflicts between identity groups subse-
quently become intra-institutional rather
than extra-institutional. That is, they happen
‘for’ the organization, and within the
constitutional framework it creates, rather
than against or outside of it.5
We do not know the frequency with which
successful institutionalization processes
actually unfold in organizations. There are
numerous reasons to believe they might be
rare and difficult. To begin, pluralism itself is
a major threat to such processes as well as
their chief enabler. Workable identity coali-
tions (i.e. reasonably coherent organizational
selves) likely become more difficult to
maintain as identities proliferate within an
organization. Further, powerful identity
groups have the opportunity and incentive to
short-circuit institutionalization by using
their power to narrow or rationalize organiza-
tional purposes and effectively cut weaker
identities out of the coalition. Such efforts
may often be well-intentioned, though
ultimately shortsighted. It is also important
to remember that self-governance is an ongo-
ing process; one which is only set in motion
when a nascent institution makes constitu-
tional commitments. If the self-governing
institution is to flourish, it must actually
follow-through on these commitments over
time (i.e. act with integrity). It must also
develop integrative mythologies and ‘robust’
symbols that manage to satisfy the individual
parts of the organization at the same time
they draw these parts together into an emer-
gent whole (Ansell, 1997; Atkinson, 1985;
256 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Bernstein, 1971; Clark, 1970; Padgett &
Ansell, 1993; Selznick, 1957). The creation
of formal and informal structures is likewise
integral to any successful institutionalization
project (Selznick, 1949, 1957). Finally,
institutionalization also affords a large
degree of influence to human selves – who
appear as ‘leaders’ within the process. The
autonomous and self-governing organiza-
tional institution can be a profoundly cooper-
ative, socially integrative, and highly durable
entity. It can also undergo a radical subver-
sion of purpose, become an instrument of
elite domination, and/or become insular and
inertial in the face of a changing
environment. Selznick (1957) holds that
institutional leadership (i.e. ‘organizational
statesmanship’) is often required to ensure
the former outcomes and avoid the latter
ones. But, he also suggests that such leader-
ship is often most notable by its absence.
These challenges notwithstanding, we see
an important opportunity for institutional
research which gives renewed attention to
integrative processes of governance at the
organizational level. Whether or not plural-
ism ultimately leads to the development of a
self-directing organizational institution, its
minimal effect is to make individual organi-
zations into important arenas of governance.
Institutional researchers might learn much by
peering more deeply into these arenas.
However, we do not suggest that they should
lose sight of broader, embedding institutions
in so doing. As we have emphasized, the
individual identities which contend for influ-
ence within the pluralistic organization have
societal roots.6 These roots are not severed
even when an organization becomes an insti-
tution in its own right. Its autonomy and
self-awareness may make it a more effective
and formidable player within its pluralistic
institutional context. But, it likely remains a
creature of its social environment and it prob-
ably needs to be understood this way.
The ability to tie together disparate institu-
tional worlds may be a major source of orga-
nizational distinctiveness and competence.
But, this governance capability cannot be
understood unless we also attend to the
broader institutional orders which the organ-
ization must actually bridge. This may be an
important insight for stakeholder theorists.
While these scholars express much optimism
about the benefits to be realized from collab-
orative organizational governance, they have
said relatively less about the profound
ideological and political challenges coopera-
tive governance entails. Organizations may
be able to integrate their societally-given
identities to a significant extent, but society
itself remains divided. Neo-institutionalism
helps us understand the nature and
significance of these divisions (Friedland &
Alford, 1991).
INSTITUTIONAL PLURALISM
AND THE PROBLEM OF
ORGANIZATIONAL CHANGE
Our chapter’s final section focuses on the
problem of organizational change, and par-
ticularly on understanding change of the rad-
ical or transformative sort. We believe that
institutional pluralism has significant impli-
cations for this phenomenon and for our the-
oretical understanding of it. In order to
understand these implications, it is first
useful to consider some key neo-institutional
insights about organizational change.7
To begin, the perspective helps us
understand the main reasons why change is
likely to be problematic for the organization.
Specifically, it suggests that prevailing
institutions are apt to constrain change, and
draws special attention to the role that
institutionally-given identities play in subtly
perpetuating the organizational status quo
(D’Aunno et al., 2000; DiMaggio & Powell,
1991; Greenwood & Hinings, 1993, 1996,
2006). Second, the theory helps us under-
stand how change is likely to unfold within
an organization. The most typical expected
pattern is one of punctuated equilibrium.
In ordinary times, the organization is likely
to engage in incremental changes that basically
 ORGANIZATIONAL IMPLICATIONS OF INSTITUTIONAL PLURALISM
converge with its core identity and cohere
with its constitutive logic. However, these
convergent periods are intermittently punc-
tuated by shorter episodes of divergent
and revolutionary change (Greenwood
& Hinings, 1996; Greenwood & Hinings,
2006). These disruptive spates are most
likely to be exogenously precipitated, to
involve significant conflict, and to be spurred
on by marginal or disadvantaged actors (as
revolutions typically are) (Hirsch, 1986;
Kraatz & Moore, 2002; Leblebici, Salancik,
King & Copay, 1991). Finally, the perspec-
tive also offers important insights about the
actual nature of radical organizational
change. Because neo-institutionalism
conceptualizes the organization as a funda-
mentally cultural entity, transformation is
thought to occur when one set of constitutive
beliefs ultimately gives way to another one.
It is at this point that the organization is truly
reconstituted, becoming something radically
different than it once was (Greenwood &
Hinings, 1996, 2006). This general account
of organizational transformation shares
appreciable similarities with other punctu-
ated equilibrium models of change (Gersick,
1991; Meyer, Brooks & Goes, 1990;
Tushman & Romanelli, 1985), with configu-
rational approaches to organization (Meyer,
Tsui & Hinings, 1993; Miller & Friesen,
1984), with models of organizational learn-
ing that emphasize the deep tension between
exploitation and exploration (March, 1991;
1994, 1999), and with recent research in
organizational ecology which sees organiza-
tions’ socially-given identities as key sources
of inertia (Baron, 2004; Hannan, Baron, Hsu
& Kocak, 2006).
We believe that this perspective is quite
useful as a starting point for understanding
organizational transformation. But, we also
think it becomes increasingly unsatisfactory
as institutional pluralism grows. Pluralism’s
basic implications for organizational change
are largely foreshadowed in our earlier
discussions of governance and legitimacy.
First, pluralism has the effect of problematiz-
ing organizational stability and of making
257
change somewhat less rare and remarkable
than it may appear from a neo-institutional
perspective. The deep-rooted tensions that
are built in to the pluralistic organization
seem to make its mere ability to hang
together something of a mystery. It appears
more likely to be fraught with excessive
change than to be burdened with inescapable
inertia. Stability may thus be seen as a sort of
achievement (and perhaps a tenuous one).
Second, pluralism problematizes the mean-
ing of any given organizational change.
Categorizing a particular organizational
change as convergent or divergent becomes a
troublesome task, one which requires sub-
stantial judgment on the part of the research
(and perhaps on the part of the change agent
as well). Because the same change often
conveys different symbolic meanings to
different constituencies, it may be highly
convergent (legitimate) with respect to one
identity, deeply divergent (illegitimate) with
respect to another, and wholly irrelevant or
unnoticed by a third. Finally, pluralism
compels us to see particular changes not just
in relation to multiple external institutions,
but also in relation to the institution that the
organization itself may have become. This
means that we need to ask how a given
change fits with the organization’s unique
history and claimed purpose. Is it at odds
with the commitments that the organization
has itself embraced and evinced? How will it
affect the balance of power within the orga-
nization’s coalition of identities? We also
need to ask how and if the change fits with
the organization’s own unique mythology
and espoused mission, which have presum-
ably developed in order to integrate its
identities and sustain the coalition among
them. The answers to these questions are
likely to determine not only the local
meaning actually assigned to a given
change, but also the organization’s ability to
implement that change and its ultimate
consequences, as well.
The most obvious pattern of organiza-
tional change that pluralism may produce is
one of ongoing and largely uncontrolled flux.
258 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
This rather extreme consequence is espe-
cially likely to occur in loosely coupled
organizations. Under loose coupling,
autonomous identity groups can pursue their
respective aims with little interference from
other groups and little oversight from a cen-
tral authority. This situation would appear to
promote the type of organizational dynamics
that March and colleagues had in mind in
their discussion of organizational anarchies
(Cohen & March, 1986; March & Olsen,
1976). Another important effect of pluralism
is to create change processes that are rife
with unintended consequences (Merton,
1936; Selznick, 1949). Though constituent
groups within the pluralistic organization
may be able to act autonomously, their
actions are apt to reverberate throughout the
larger system as a result of unrecognized (or
disregarded) interdependencies. Thus, organ-
izations may sometimes be transformed
almost by accident. Kraatz & Ventresca
(2007) provide one good example of such a
change process in the context of American
higher education. They study the diffusion of
enrollment management (EM), a now-
controversial set of marketing practices and
structures designed to increase enrollments,
improve college rankings, and maximize net-
tuition revenues. Enrollment management’s
wide adoption has transformed the admis-
sions function, fundamentally changed the
purpose of financial aid, and helped make
universities considerably more ‘market-
driven,’ among other consequences.
However, Kraatz and Ventresca find that this
change was adopted rapidly and widely with
little apparent controversy. Admissions
personnel embraced the practice because it
was an effective solution to technical prob-
lems, because it allowed them to realize their
job-specific goals, and because it was
increasingly deemed ‘appropriate’ by the
emerging logic of the growing EM profes-
sion. Though EM was (and is) highly
illegitimate with respect to the values and
beliefs of many other identity groups in and
around the university, this conflict remained
latent until after EM was in wide use.
Change processes like this one suggest that the
problem of controlling organizational change
may be of equal importance to the problem
of initiating it (at least in pluralistic organiza-
tions). March (1981) and Tsoukas and Chia
(2002) have previously theorized similar
change processes, though their accounts are
less closely linked to institutional arguments.
Pluralism is likely to affect change some-
what differently in an organization that has
developed a stronger sense of itself and thus
become institutionalized in the Selznickian
sense. One possibility for such an organiza-
tion is that its chosen commitments will
become anchors, constraining it in basically
the same way that an externally imposed
identity might. Selznick (1957) himself
warns of this potential, noting that the
creation of distinctive competencies is often
accompanied by the parallel emergence of
distinctive incompetencies. However, this is
clearly not Selznick’s dominant message.
To the contrary, he sees institutionalization as
a process that tends to promote adaptation;
one which not only allows an organization to
change, but which may also allow (or even
compel) it to change intelligently. We have
already elaborated the basic explanations for
this proposition. To review, the Selznickian
institution: (1) possesses multiple institution-
ally-derived identities, thus escaping the con-
stitutive iron cage that a monistic field may
impose; (2) is an autonomous ‘organizational
self’ which is capable of reprioritizing, rein-
terpreting, and mediating between its identi-
ties according to necessity; (3) has
constitutional commitments that put limits
on its flexibility and compel it to act respon-
sibly with respect to its constituents and
its history; and (4) is valued not only as a
means through which constituents pursue
their individual aims but also as a non-
expendable end in its own right. Together,
these characteristics provide the organiza-
tional institution with the necessary motiva-
tion and opportunity for change. In the right
combination, they may also enable it to
change intelligently, as we shall discuss
further below.
 ORGANIZATIONAL IMPLICATIONS OF INSTITUTIONAL PLURALISM
Selznick and his contemporaries provided
numerous examples of organizational trans-
formations resulting from institutionalization
processes (Clark, 1956; Messinger, 1955;
Selznick, 1949; Zald & Denton, 1963). The
recurrent theme in these studies was that
individual organizations essentially took on
lives of their own, obtaining remarkable flu-
idity as their constituents infused them with
value and strived to ensure their survival
amid changing circumstances. More current
examples of similar processes are common.
Kraatz and Zajac (1996), for instance, found
that American liberal arts colleges widely
adopted professional degree programs
(which were seemingly antithetical to their
missions and identities) in the effort to sur-
vive declining enrollments and changing stu-
dent degree preferences. Suspitsyna (2006)
shows how economics departments in
Russian universities have transitioned to the
teaching of western economics, which they
officially categorized as a false, ‘bourgeois
science’ during the Soviet era. Perhaps even
more striking is the Chinese Communist
Party’s recent push to integrate prominent
capitalists within its ranks (Kahn, 2002).
What is noteworthy about all of these change
processes is not only that organizations have
changed in ways that appear antithetical to
their (apparent) core identities, but that they
have made these changes without renouncing
those identities (and often in the very name
of them). We think that the occurrence of
such changes points to the existence of
deliberative and adaptive organizational
institutions. These organizations appear to
have been capable of escaping the constraints
imposed by their institutional identities, and
even of reinterpreting those identities in
order to serve their own changing needs and
purposes. Organizational change processes
like these are difficult to conceive through
the lens of either neo-institutionalism or
organizational ecology, both of which tend to
portray identities as externally imposed
sources of constraint.
The organizational ability for self-transfor-
mation is sometimes tragic, sometimes ironic,
259
and sometimes merely absurd. But, it is also
sometimes genuinely desirable and emulable.
The same basic processes which allow orga-
nizational purposes to be subverted and dis-
placed in some organizational institutions
allow other institutions to intelligently adapt
to changing environments and thus continue
to serve their constituents. An effectively
self-governing institution must, after all, be
able to determine (and adapt) its basic
purposes. Though Selznick viewed institu-
tionalization and its accompanying changes
as ‘fundamentally neutral,’ he had much to
say about the factors that might push the
process in a positive or negative direction. In
the ideal circumstance, the organizational
institution is responsive to the demands of its
pluralistic environment but also responsible
to its defining commitments and its history
(Selznick, 1957, 2000). When these pressures
effectively counterbalance one another, the
organization is unlikely to change too much
or too little. The diversity which pluralism
builds into the system provides the variation
and conflict necessary to avoid competency
traps (March, 1991), which result from exces-
sive homogeneity and a disproportionate
emphasis on convergent, exploitative change.
At the same time, the organization’s historical
commitments and sense of self keep it from
engaging in excessive exploration and thus
falling victim to the obverse problem of the
‘failure trap’ (March, 1991). The relational
structure of the institution may also be instru-
mental in promoting intelligent adaptation, in
that it brings diverse identity groups into dia-
logue with each other and ultimately directs
their energies toward a shared (if necessarily
emergent and robust) organizational purpose
(March & Olsen, 1995; Moore & Kraatz,
2007).
Institutionalization is likely to follow a
less therapeutic path to the extent that these
forces are not in balance with one another.
One way in which this balance may be
disrupted is through ‘opportunistic’ adapta-
tion. Selznick (1957) conceptualizes opp-
ortunistic changes as ‘irresponsible’ ones
that are undertaken without sufficient
260 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
consideration of organizational commitments
and competencies, and without necessary
regard for their longer-term consequences.
Attempts to pander to constituencies and cash
in on current fads may, for instance, fall in
this category. The flipside of opportunism is
what Selznick calls utopianism. This occurs
when the organization becomes caught in its
past and holds to ideals that it can no longer
effectively realize. Importantly, Selznick sees
utopianism, as well as opportunism, as a key
threat to his master ideal of organizational
integrity. Within his pragmatist framework,
integrity requires the continued existence of
the entity. It is not a virtue one ascribes to
martyred organizations or doomed idealists.
Of equal importance is the fact that integrity
can only be assessed on a case-by-case basis
(and even then only tentatively). An organiza-
tion’s choices may cause us to reasonably
question its integrity, but it may also have
commitments and reasons for its actions that
are not accessible to the analyst. Integrity
(to the extent it exists) is a characteristic
of a dynamic organizational self. All selves
remain unique and somewhat mysterious in
the final analysis.
We think that it is quite telling that
Selznick, as a sociologist, chose to make
leadership the focal point of his most influen-
tial work on the process of institutionaliza-
tion. Clearly, he recognized that the
complexities of institutionalization provide
individual persons with a great ability to
influence organizational change processes,
both for better and worse. His work, espe-
cially Leadership in Administration, is largely
concerned with providing practical and moral
guidance to these persons. Though Selznick’s
advice seems primarily directed at the power-
ful, we believe his perspective may also be of
great use to those trying to create change
from within or outside the organizational
institution. Its major implication is that the
organization is a relational entity which can
become whatever its constituents make it into
(within some broad limits imposed by its his-
tory). Its robust identity and emergent
purpose may allow the powerful to co-opt it,
but they also allow the marginalized to sub-
vert it. While neo-institutional perspectives
on change tend to focus on precipitating orga-
nizational revolutions, Selznick’s theory sug-
gests that revolution may be both unnecessary
and ultimately counterproductive. It suggests
that the organizational vehicle might be taken
in many different directions by those who
know how it works.
DISCUSSION: SCHOLARLY,
PRAGMATIC, AND HUMANISTIC
IMPLICATIONS
Our purpose in this chapter has been to draw
greater attention to the phenomenon of insti-
tutional pluralism and to lay out some of its
organizational implications. We think that
the problem is an important one for organiza-
tional researchers, for would-be organiza-
tional leaders, and for other organizational
constituents and members. We will discuss
these complementary implications in turn as
we close the chapter.
Scholarly implications
We have already said much about pluralism’s
implications for organizational legitimacy,
governance and change. Nevertheless, it may
be useful to review and elaborate some of our
key points with an eye toward promoting
future research. We will also consider our
chapter’s possible implications for a few
other areas of study that we have not yet
explicitly discussed.
Organizational legitimacy
Meyer and Scott (1983: 202) proposed that
‘the legitimacy of a given entity is negatively
affected by the number of different authori-
ties sovereign over it and by the diversity or
inconsistency of their accounts of how it is to
function’ (reprinted in Scott, 2001: 60). Our
discussion of the legitimacy problems faced
by organizations in pluralistic contexts began
 ORGANIZATIONAL IMPLICATIONS OF INSTITUTIONAL PLURALISM
in a very similar place, but ended up some-
where quite different. We acknowledged that
pluralism problematizes legitimacy, but we
also suggested that organizations may
benefit from it and thrive in its midst. We
think that future research might give more
attention to the possibility that organizational
legitimacy can be additive or even multi-
plicative, rather than zero-sum as Meyer and
Scott seem to propose. We see no obvious
reason to predict that an organization cannot
fulfill multiple purposes, embody multiple
values (or logics), and successfully verify
multiple institutionally-derived identities.
Indeed, we think that organizations that
embody multiple values and are successful at
more than one thing (e.g. research and teach-
ing, satisfying shareholders and environmen-
tal groups, upholding professional standards
and serving clients) may be especially legiti-
mate for that very reason. The contradictory
standards and expectations which are
imposed by different constituencies no doubt
put limits on these hypothesized integrative
benefits, and thus block any path to organiza-
tional utopia. But, as we have also suggested,
the organization may attain substantial
autonomy from institutional authorities (who
may not be most accurately described as
‘sovereign’ over it) (Oliver, 1991; Selznick,
1957). Further, the very fact that different
institutional actors care enough about an
organization to levy multiple demands upon
it may be the more telling indicator of its
actual legitimacy. Consider the counterfac-
tual situation wherein no demands are
imposed and no support or endorsement is
offered in return.
We also think that future research on orga-
nizational legitimacy might give more
attention to the ‘commitment problem’ that
we discussed and to the related idea that
organizations may acquire some capacity to
legitimate their own actions as they become
institutions themselves (Goodstein, Blair-
Loy & Wharton, 2006). We suggested that
constituents attribute entitativity (Campbell,
1958; Hamilton & Sherman, 1996) to organ-
izations and apply second-order criteria in
261
ascribing legitimacy. In other words, they are
likely to anthropomorphize organizations
and look for evidence of integrity and self-
consistency in their actions (Selznick, 1957;
Stinchcombe, 1997). If this is true, the legit-
imacy-seeking organization needs not only to
be multiple things to multiple people, but
also something unto itself. It is hostage to its
own history and to the identities and ideals it
has claimed as its own (Selznick, 1996).
While this dual imperative is the source of
the ‘politician’s dilemma’ we identified, we
also suggested that this dilemma may carry
the seeds of its own solution. The organiza-
tion that recognizes its commitments and
takes responsibility for them may gain
needed autonomy and support from its con-
stituents, even when its decisions are at odds
with their near-term interests and parochial
values. At the same time, the practical neces-
sity of responding to the changing needs of
constituents may liberate the organization
from the dead weight of its past. We think
that future research examining organizational
attempts to navigate the politician’s dilemma
(both successful and unsuccessful ones) may
be revealing.
Organizational governance
Our discussion of institutional pluralism also
led us to the conclusion that institutional
governance is an ongoing process which
transpires within the boundaries of individual
organizations (as well as at higher levels). In
some cases, the pluralistic organization may
merely serve as an arena wherein diverse
identity groups with different values and
logics vie for influence and wherein
recurrent bouts of ‘legitimacy politics’ occur
(Ocasio & Kim, 1999; Stryker, 2000). Such
an organization may constitute a sort of
‘garbage-can’ which is filled with institu-
tional refuse (Heimer, 1999). However,
we also suggested that a more durable and
stable ‘coalition of identities’ may emerge as
identity groups learn to coexist and recognize
their symbiosis. We further noted that some
organizations may become effectively
self-governing as they become institutions
262 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and develop distinctive ‘organizational
selves’ that somehow encompass, integrate,
or transcend their externally-given identities
(Selznick, 1957).
We think that the examination of such
integrative processes poses a particularly
important opportunity for future research.
We find it unfortunate and somewhat ironic
that much contemporary research on gover-
nance seems to rule them out by assumption.
The dominant focus on governance as
control (whether by ownership, incentive,
coercion, or cultural hegemony) often
appears to blind researchers to the very pos-
sibility of cooperation (i.e. of what Mary
Parker Follett called the ‘power with’ rather
than ‘power over’) (Graham, 1995).
Prevailing theories seem particularly
ill-suited to the analysis of organizations
wherein constituencies cooperate in order to
achieve wholly distinct purposes
(e.g. making money and saving lives, scien-
tific research and professional education,
etc.). We think that the organization with
such diverse purposes might be productively
conceptualized as a sort of ‘pluralistic social
dilemma.’ Its constituencies are mutually
dependent as in the archetypical social
dilemma (Hardin, 1968). They require coop-
eration from other groups in order to achieve
their own ends, and each group has some
ability to block the others’ attempts at goal
attainment. But, because the purposes and
values of each group are wholly distinct
(and perhaps fundamentally incommensu-
rable) the recognition of mutual
dependence and potential symbiosis is
greatly hindered. Purposes that are
merely different are likely to be viewed as
oppositional. The close association of
group identities with group objectives
likely exacerbates this problem (Kramer,
1991).
We would like to see more theory and
research which looks for organizational and
managerial solutions to this basic dilemma of
governance. How do successful organiza-
tions realize what Collins and Porras (1994)
optimistically call ‘the genius of the and’
while avoiding its obverse (‘the tyranny of
the or’)? Is loose coupling a sufficient solu-
tion? Is the creation of quasi-democratic
structures and processes which grant voice,
due process and autonomy to diverse
constituencies a viable option? Can organiza-
tions create integrative mythologies and mis-
sions that effectively bind together diverse
constituents and somehow allow for the joint
realization of incommensurable values? Can
(or must) they develop robust and multivocal
identities that allow them to be multiple
things to multiple people (and to change)
while appearing to be unified and self-
consistent? If so, what sorts of rhetoric and
symbolism are effective at facilitating this
quasi-integration? Finally, what role do
people play in holding together the pluralis-
tic organization? What kind of a mindset
enables a person (particularly a leader) to
effectively function in the presence of so
much diversity? We would also like to see
more research that examines failed attempts
at cooperative governance (and which
describes them this way, rather than as the
mere result of power politics or inexorable
cultural forces). Selznick (1949) reminds us
that organizations are recalcitrant tools and
shows how cooperation and idealism can
give way to elite domination and goal dis-
placement. But, he also reminds us that the
iron law of oligarchy is not iron and not a law
(Selznick, 1992). He stresses that ideals are
called ideals for a reason. The revealed
impossibility of perfect cooperation is no
reason to abandon cooperative aims or to
devalue organizations which achieve them
only imperfectly and partially.
Organizational change
Our discussion of organizational change
yielded at least three key insights for future
research. First, we suggested that pluralism
problematizes stability and makes organiza-
tional change less unusual and difficult than
it often appears when viewed through a neo-
institutional lens. The same institutional
forces which might create organizational
inertia (operating in isolation) can produce
 ORGANIZATIONAL IMPLICATIONS OF INSTITUTIONAL PLURALISM
dynamic tensions and a potential for near-
constant change through their conjoint oper-
ation (March, 1981). This effect is likely to
be especially pronounced when an organiza-
tion is loosely coupled, thus allowing various
identity groups to pursue their distinct
purposes in relative isolation (March &
Olsen, 1976; Weick, 1976). We suggested
that the unintended consequences of such
change processes may produce organiza-
tional transformation without revolution
(Kraatz & Ventresca, 2007). We think that
this implies a need for research which
rethinks processes of radical organizational
change (and perhaps expands the concept
itself) (Greenwood & Hinings, 2006).
Second, we showed that pluralism may facil-
itate organizational processes of institution-
alization and identity formation that actually
enable and productively guide adaptation.
The organization that becomes valued as a
non-expendable end in itself may acquire a
significant (perhaps extreme) degree of flex-
ibility. But, institutionalization and identity
formation may also put appropriate limits on
adaptation and allow the organization to
avoid failure traps that result from excessive
and ill-considered changes which take it too
far from its existing competencies and histor-
ical commitments (Moore & Kraatz, 2007;
Selznick, 1957). These insights may have
significant implications for contemporary
change research, especially in organizational
ecology and neo-institutionalism. These
literatures emphasize that organizational
identities affect change, but they tend to see
these identities as externally imposed, fully
constitutive and therefore constraining
(Hannan et al., 2006; Zuckerman, 1999).
Finally, our discussion of change also offered
some tangible advice for would-be change
agents. Specifically, it suggested a practical
need to justify changes with respect to the
organization’s own claimed ideals, espoused
identity, and distinctive history (and with
respect to the ideals and identities of parti-
cular groups and persons therein).
Revolutionary rhetoric is likely to produce
counter-revolutionary responses. This is
263
highly problematic when change recipients
have the power to resist or ignore change
initiatives (as they most often do in pluralis-
tic organizations). In contrast, even extreme
changes may be more readily accepted when
they are framed in a way that allows people
to conserve their own sense of personal and
organizational identity. This principle of
‘identity conservation’ may be a useful one
for change researchers to explore.
Organizational leadership
Our chapter has also made numerous
references to leadership (or ‘organizational
statesmanship’). While this concept was a
notable casualty of the neo-institutional
revolution, we think that institutional plural-
ism has the effect of making leadership both
practically necessary and philosophically
possible. The pluralistic organization does
not automatically hold itself together.
Naturally occurring social and political
processes may facilitate institutionalization
and the formation of an organizational-self.
Political structures and integrative mytholo-
gies may likewise help sustain this emergent
self. But, these processes and structures are
not deterministic or final. Persons who find
themselves at the top of (or in the middle of)
pluralistic organizations have much work to
do in knitting them together (Gardner, 1990;
Selznick, 1957). We are also inclined to
attribute agency to these persons. Because
they work at the nexus of multiple identities
(and multiple normative orders), they
regularly find themselves in situations where
they have ‘no choice but to choose.’ Their
choices (even their default, taken-for-granted
choices) may have very significant conse-
quences for the evolution of their organiza-
tions (Emirbayer & Mische, 1998). We
think it is reasonable to treat such persons
as ‘sites of causation’ (Abbott, 1996). We
also think it is appropriate to assign
moral praise and blame to them (as all
research which invokes the value-laden
and inescapably moral concept of leader-
ship inevitably does) (Burns, 1978; Ciulla,
2004). Kraatz (2007) considers institutional
264 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
pluralism’s implications for leadership in
more detail.
Organizational identity
We have also said much about organizational
identity in the preceding pages. Our chapter
may have some implications for the narrower
literature on this topic, despite our broader
aims (and despite our acknowledged igno-
rance of that literature’s subtleties) (see
Glynn, Chapter 16 in this volume for a more
nuanced discussion). We think that our
notion of the organization as a coalition of
identities and as a (potentially) integrated
‘self’ may be particularly generative. The
identity literature has historically conceptu-
alized organizational identity as that which
is ‘central, distinctive and enduring’ about
an organization (Albert & Whetten, 1985).
This idea rests rather uneasily alongside
more sociological conceptualizations which
see identities as institutionally-derived,
externally-imposed, and categorical in
nature. According to the latter view, identi-
ties are certainly central and enduring, but
they are in no real sense distinctive or pos-
sessed by the organization. We have provided
some insights about how an organization
may develop a distinctive and robust identity
of its own by embracing and embodying its
various institutionally-given role identities
(rather than escaping or eschewing them).
Institutional pluralism is what seems to make
this possible. Identity scholars might further
explore this proposed process and more
effectively unpack the abbreviated theoreti-
cal account we have developed here.
Stakeholder theory
As we have noted, stakeholder theorists also
argue that organizations (specifically corpo-
rations) should be seen as pluralistic entities
with multiple purposes and responsibilities
(Donaldson & Preston, 1995; Jones, Wicks &
Freeman, 2002). They similarly argue that
corporations will realize practical benefits
if they respect the legitimate interests of
their multiple constituencies and deal fairly
with them (Donaldson & Dunfee, 1994;
Jones, 1995). Stakeholder theorists have
based their arguments upon moral philoso-
phy, upon practical reasoning, and to a lesser
extent upon empirical research. The implicit
or explicit objective of most work in this area
is to bring an end to shareholder hegemony
and to promote a more democratic and coop-
erative social order within the modern corpo-
ration. However, research in this area says
relatively less about how stakeholder gover-
nance might be achieved if and when share-
holders are deposed from their preferred
status. It also often appears somewhat naïve
as to the political, ideological and cultural
challenges involved in creating and sustain-
ing cooperation in any complex, pluralistic
organization. The stakeholder literature’s
arm’s length relationship to social scientific
theory and research appears to be a particular
liability in this regard. Our chapter has
explored many of the challenges facing plu-
ralistic organizations and has identified some
possible solutions to them. We hope that it
might serve as a resource for future stake-
holder research and help build bridges
between this perspective and other theories
of organization.
Neo-institutionalism
Our chapter has no necessary implications
for the neo-institutional research agenda.
That perspective, as we interpret it, has a core
commitment to understanding higher-order
institutions and field-level processes of
institutionalization and institutional change.
Its central empirical concern has been with
explaining the legitimation and diffusion of
various practices, structures and forms (and
more recently changes therein). The ‘whole’
organizations which are our explicit focus
here do not even clearly exist when we view
the organizational world through a neo-
institutional lens. The perspective does not
tend to support the idea that organizations are
(or can be) autonomous, integrated or self-
governing entities (i.e. ends in themselves).
Rather, it leads us to view them more as the
means that powerful institutional actors use
to achieve their purposes, or perhaps as the
 ORGANIZATIONAL IMPLICATIONS OF INSTITUTIONAL PLURALISM
slates upon which larger cultural institutions
(and institutional entrepreneurs) leave their
mark. While much recent work in this tradi-
tion has focused on the same inter-institu-
tional tensions and conflicts that we have
discussed here, it has primarily sought to
understand these tensions’ implications for
fields, rather than for individual organiza-
tions (e.g., Hargrave & Van de Ven, 2006;
Lounsbury, 2007; Marquis & Lounsbury,
forthcoming; Schneiberg, 2007; Schneiberg
& Soule, 2005; Thornton, Jones & Kury,
2005).
We think that field-level and societal-level
institutions are certainly an appropriate focus
for sociological research, and we have
learned much from studies examining them.
We also agree that demonstrating these insti-
tutions’ effects upon organizations is a com-
pelling way to document their existence and
importance. Nonetheless, we think it is
essential to clearly distinguish the neo-
institutional research endeavor from the
program of research that we inherited and
have tried to further in this chapter. Scholars
committed to understanding organizations as
ends in themselves will never discover
answers to the questions that legitimately
preoccupy neo-institutionalists. But, we
think the obverse is equally true and perhaps
much less well-understood. We hope that our
chapter provides some evidence of the great
potential symbiosis between neo-institution-
alism and the ‘organization-centric’ theories
of organizations that predated it and that con-
tinue to persist alongside it. But, we also
hope that it demonstrates the continued need
for separation, lest our respective purposes
and competencies become attenuated and
confused (and lest further tensions between
the two scholarly camps be needlessly per-
petuated and exacerbated). It is for this
reason that we have proposed the idea of an
‘institutional organizationalism’ which is dis-
tinct from the ‘organizational institutional-
ism’ that is the primary focus of this volume.
The means of the latter are the ends of the
former (and vice versa). The one’s figure is
the other’s ground.
265
Pragmatic and humanistic
implications
While our chapter’s primary implications are
for organizational scholarship, we believe
that our discussion of institutional pluralism
may also have some practical and humanistic
implications. We are obliged to discuss these.
In writing this chapter, we have been much
influenced by the philosophy of American
pragmatism (Dewey, 1929, 1938; James,
1907). This influence is neither superficial
nor incidental. William James, who first pop-
ularized this philosophic stance, was also an
early proponent of pluralist thought (James,
1909). Pragmatism pervades the work of
Selznick, of Mead, and of the sociological
identity theorists whose ideas have also
much influenced us (Mead, 1934; Selznick,
1992; Stryker, 1980). Pragmatist themes are
also much apparent (though less explicit) in
March’s work and elsewhere in the canon of
American organization theory dating to
Barnard (Ansell, 2002; Thompson, 1956).
Many stakeholder theorists have been
influenced by this philosophy as well (Wicks
& Freeman, 1998).
One of pragmatism’s central messages is
that theories should be judged (at least in
part) according to their practical implications
for the people who may ultimately come to
believe them (James, 1907; Peirce, 1878).
Pragmatism highlights the continuities
between thought and action, and between
academic and practical knowledge. It also
emphasizes that the practical consequences
of academic ideas can be momentous. Taking
pragmatism seriously thus has the effect of
putting scholars and organizational
participants on the same side of the fence (as
fellow humans trying to understand and live
in an ambiguous and unfolding world). We
believe that this both ennobles and humbles
the theoretical enterprise. The ennoblement
comes from the recognition that theories can
and do matter. Organizational scholars have
the opportunity to participate in the ongoing
construction of reality by creating metaphors
that escape the academia and ‘become true’
266 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
as people use them to make sense of them-
selves and their ambiguous organizational
worlds (James, 1907). The humility has the
same essential source. Bad metaphors can
have frightening consequences for people
and institutions. These consequences can be
particularly strong when scholarly theories
are boldly forwarded in scientific guise, or
when theorists display a disregard for empir-
ical evidence and the lessons of history
(Ferraro, Pfeffer & Sutton, 2005; Ghoshal &
Moran, 1996). Theorists’ preoccupation with
abstract analytical truths (or political agen-
das) can also have the deeply ironic effect of
making practically soluble problems into
theoretically or ideologically irresolvable
ones (Krygier, 2002; Selznick, 1992).
Pragmatism thus suggests that we theorize
cautiously lest we help create the very world
we fear (or the one that we naively think we
want). It also suggests that social science
should be seen as a humanistic (i.e. moral)
enterprise (Selznick, 1992; Zald, 1993).
Scholars are implicated in their theories and
share some responsibility for the ends which
they ultimately render (or fail to render).
Importantly, this philosophical position does
not imply that organizational scholars should
wake up in the morning thinking about how
to change the world (or fearing that they
inadvertently might). It also does not imply
that researchers should take their marching
orders from corporations or management
consultants. Administrative science (like sci-
ence in general) needs autonomy from its
constituencies if it is to deliver anything of
actual value to them (Selznick, 1992;
Thompson, 1956). But, autonomy is not to be
confused with total independence, and the
legitimate need for it should not be used as a
cover for irresponsibility. Pragmatism thus
implies that organizational theory needs to be
responsive to its different constituents, even
if it ultimately keeps its own counsel and
decides its own purposes. Scholars need to be
aware of the consequences their metaphors
may create, even if they develop those
metaphors for purposes that are primarily
(and justifiably) academic (Selznick, 2000).
In light of this philosophical background,
one way to read our chapter is as an attempt
to put forth some new metaphors (and some
recovered metaphors) that might put people
in better relation to their organizations and
perhaps positively affect those organizations,
as well (if only on the margins). Institutional
pluralism is itself a metaphor. It is not an
innocent one. We have willfully used it to
name an apparent reality which could be (and
has been) described much differently (e.g. as
fragmentation or the postmodern condition).
We find the pluralism metaphor compelling
because it suggests the possibility of symbio-
sis and latent cooperation among distinct
identity groups, even in organizations where
conflict and dissensus are very real and per-
haps much more clearly evident. It is also
appealing because it suggests the possibility
of an emergent organizational whole that is
capable of accommodating, encompassing,
and governing its various distinct parts.
The idea of an organizational self (or a
human self) obviously points to a similar
possibility (Selznick, 1957; Wiley, 1994).
These notions are equally metaphorical.
We think that these (somewhat) integrative
metaphors are scientifically tenable ones,
based on the available data and the academic
arguments we have presented above.
Organizations do seem to hang together
(however imperfectly), and the centripetal
forces that integrate them are no less
scientific than the centrifugal ones that tend
to fragment. But, we also think that integra-
tive metaphors are of substantial practical
and humanistic value. This tends to tip the
balance in their favor to the extent one takes
pragmatism seriously. Any person who has
spent time in a position of organizational
authority likely recognizes the need for some
notion of shared purpose, common good,
and/or collective identity, however vague and
robust those notions might be. These integra-
tive and idealistic notions are not only useful
for elites who are looking to consolidate,
legitimize, and perpetuate their own power
(though history shows they are certainly
valuable as means to those ends). Rather, we
 ORGANIZATIONAL IMPLICATIONS OF INSTITUTIONAL PLURALISM
think they are also essential resources for
leaders who are actually trying to do justice,
achieve diverse purposes, act responsibly,
and realize the common good within their
organizations (i.e. to achieve something
vaguely resembling substantive cooperation)
(Krygier, 2002; Selznick, 1969, 1992, 1996,
2000).
Such ideals may be equally indispensable
to lower-level participants who are striving
to achieve similar ends on a smaller scale,
or trying to reform unjust organizations
from structurally disadvantaged positions
(Badaracco, 2002; Meyerson, 2003).
Cynicism about the motives of organizational
leaders (and about the legitimacy of organi-
zations in general) may be a very useful out-
look for the person looking to incite
disruptive change and organizational reform.
But, this same skepticism may foreclose real
opportunities for cooperative change. It may
also ultimately turn inward, leading the
reflective revolutionary to examine his or her
own motives and to question his or her own
ability to build a more just and respectful
organizational order in the wake of the revo-
lution (Stever, 2000). The yearning for a new
and better form of cultural hegemony is not,
after all, the sort of ideal that tends to ani-
mate and sustain the romantic mind. (‘Meet
the new boss. Same as the old boss.’). Thus,
of all the real barriers to cooperation which
clearly exist, we suspect that a lack of belief
in the very possibility of the thing itself may
be the most thoroughly devastating. We do
not think that organizational theorists should
let go of this theoretical possibility thought-
lessly or carelessly. We also think they
should be very cautious about propagating
organizational metaphors that might lead
people to take hegemony for granted as
inevitable. This chapter represents, among
many other things, a modest effort to sustain
belief (however minimal) in the prospects for
cooperative organization, without disregard-
ing the huge challenges it involves or the
estimable empirical evidence which has been
amassed against it. Pluralism may ultimately
devolve into fragmentation or give way to
267
domination, regardless of what we call it.
But, these possibilities seem all the more
likely to the extent that organizational
theorists abandon integrative theoretical
metaphors altogether. At minimum, these
idealistic notions provide a standard against
which the more disturbing empirical realities
of organizational life can be judged. But,
they may also be necessary if those realities
are to change for the better.
ACKNOWLEDGMENTS
We would like to thank Jerry Davis, Mary Ann Glynn,
Andrew Hoffman, Candy Jones, Michael Lounsbury,
Christine Oliver, Mike Pratt, Nelson Phillips, Marc
Schneiberg, Andrew Spicer, Patricia Thornton,
Andrew Van De Ven and Ed Zajac for their comments
on earlier drafts of this chapter.
NOTES
1 March (1999: 228) explains the difference
between the logics thusly: ‘In a consequential logic,
a person is “in touch with reality” and asks, What are
my alternatives? What are the probable conse-
quences of those alternatives? What are the values to
me of those probable consequences? Then the
person selects the alternative whose consequences
he or she values the most. In an obligatory logic, a
person is “in touch with self” and asks, What kind of
situation is this? What kind of person am I? What
does a person such as I do in a situation such as this?’
Importantly, March embraces a sociological concep-
tion of identity in this theory. That is, he or she sees
identities as institutionally-derived.
2 The first order/second order distinction that we
create here is owed to Frankfurt’s (1971) famous
exposition of first-order and second-order human
desires. He suggests that desires of the first order
center on particular things or outcomes. Second-
order desires, in contrast, concern the things that
one ‘wants to want’ (or wants not to want). He sug-
gests the capacity to develop second-order desires is
essential to the humanistic concept of a ‘person.’
The (perhaps non-obvious) parallel to the current
argument about organizational legitimacy is that
constituencies do not just want particular things
from an organization – they also want it to want par-
ticular things and to ‘be’ a particular type of organi-
zation. This requires that it possess certain types of
268 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
second-order virtues (i.e. desirable traits of ‘charac-
ter’). While the idea that organizations might possess
character traits is perhaps naïve and objectionable
from a social scientific point of view, much evidence
suggests that people tend to anthropomorphize
organizations and other collective actors. We discuss
this evidence and consider its implications below.
3 While we think that constituencies often look
for evidence of commitment in addition to symbolic
conformity, we are more agnostic about whether they
are typically able to discern it. It is apparent that many
self-aware organizations attempt to manipulatively
‘fake’ integrity and commitment in the same way that
they cynically fake conformity. Audiences may often
be taken in by such attempts. Our point here is only
that there are two distinct things that must (at least)
be faked by the organization seeking legitimacy. It is
also important to note that these two imperatives are
often in significant tension with one another.
4 We have painted a relatively positive picture of
organizational institutionalization here. This is consis-
tent with our goal of identifying effective organiza-
tional adaptations to pluralism. While Selznick also
emphasizes institutionalization’s positive aspects, he
similarly documents its pathologies and concludes
that the process should be seen as a ‘fundamentally
neutral’ one. Organizational autonomy is not an
unqualified good, and bad things can certainly
happen when an organization becomes valued as an
end in itself. Some integrative institutions may be
better described as unholy alliances.
5 In discussing political coalitions and parties,
Lyndon Johnson is reported to have said that it is
better to have people ‘inside the tent pissing out,
than outside the tent pissing in.’ The Selznickian
institutionalization process might be thought of as
the social mechanism creating the tent itself.
6 Selznick was clearly aware of this fact himself:
‘… although organizational controversy may be
directly motivated by narrow personal and group
aims, the contending programs usually reflect ideo-
logical differences in the larger arena. In this way, the
internal struggle for power becomes a channel
through which external environmental forces make
themselves felt’ (1957: 20).
7 Much recent research in institutional theory has
also examined processes of institutional change at
the field level (Dacin, Goodstein & Scott, 2002; Scott,
2001, Thornton & Ocasio, 1999). We do not review
this literature here, given our central concern with
organization-level processes.
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Microfoundations of Institutional
Theory
Walter W. Powell and Jeannette A. Colyvas
INTRODUCTION
For almost two decades, scholars have
stressed the need to make the microfounda-
tions of institutional theory more explicit
(DiMaggio and Powell, 1991; Zucker, 1991).
Curiously, there has been limited progress in
this effort, although Barley, Glynn, and
Sahlin, in Chapters 8, 16 and 20 in this
volume, also remedy this deficit. We think that
much analytical purchase can be gained by
developing a micro-level component of insti-
tutional analysis. Moreover, there are useful
building blocks from ethnomethodology to
Goffman on interaction rituals to Weick on
sensemaking and social psychological
research on legitimation that can be drawn
upon to contribute to this effort.
We begin by making a case for the benefits
of examining micro-processes. We then
selectively review the terrain, cobbling
together useful, albeit disparate, lines of
research and theory. The thrust of this chap-
ter is generative and by no means intended as
a comprehensive survey. From these diverse
sources, we contend, a viable micro-analysis
of institutionalization can be developed. We
apply our ideas to several contemporary
issues, notably the rise of academic entrepre-
neurship in universities in the U.S. and the
10
trend toward increased efforts at earned
income by nonprofit organizations. These
applications illustrate the analytical utility of
our approach. We conclude with a discussion
of research tools generated by this line of
theorizing that can be used to fashion com-
pelling, multi-level explanations.
WHY A MICRO-LEVEL THEORY OF
INSTITUTIONALIZATION?
The bulk of institutional research has focused
on the sectoral, field, or global level.
And properly so, as the transfer of ideas,
practices, and organizational forms spans the
boundaries of organizations, industries,
and nations. A core insight of institutional
theory is just how taken-for-granted formal
organization and rationalization has become
(Drori, Meyer, and Hwang, 2006). In our
view these macro-lines of analysis could also
profit from a micro-motor. Such a motor
would involve theories that attend to enac-
tion, interpretation, translation, and meaning.
Institutions are sustained, altered, and extin-
guished as they are enacted by individuals in
concrete social situations. We need a richer
understanding of how individuals locate
 MICROFOUNDATIONS OF INSTITUTIONAL THEORY
themselves in social relations and interpret
their context. How do organizational partici-
pants maintain or transform the institutional
forces that guide daily practice? From an
institutional perspective, how are the
passions and interests implicated in human
behavior? In our view, the development of
micro-level explanations will give more
depth to accounts of macro-level events and
relationships.
Institutional forces shape individual inter-
ests and desires, framing the possibilities
for action and influencing whether
behaviors result in persistence or change.
Macroinstitutional effects, through processes
of classification and categorization, create
conventions that are the scripts for meaning
making. This process is recursive and self-
reinforcing. Institutional logics are instanti-
ated in and carried by individuals through
their actions, tools, and technologies. Some
actions reinforce existing conventions, while
others reframe or alter them. Ideas can be
picked up in one setting and transposed to
another, tools can be multi-purpose, and
some settings are rife with multiple logics.
Such situations afford considerable latitude
for human agency and interpretation.
Nonetheless, the individuals that presently
populate institutional analysis are portrayed
as either ‘cultural dopes’ (Garfinkel, 1967:
68–75) or heroic ‘change agents’ (Strang and
Sine, 2002: 503–507). The move to
consider institutional entrepreneurs was
motivated by a desire to replace the over-
socialized individuals who seemed slavishly
devoted to habit and fashion. But the celebra-
tion of entrepreneurs has perhaps gone too
far, as not all change is led by entrepreneurs,
and surely heroic actors and cultural dopes
are a poor representation of the gamut of
human behavior. Indeed, we recoil somewhat
at the frequent use of ‘actors’ in social sci-
ence writings to characterize both individuals
and organizations. As Meyer (Chapter 21 in
this volume) notes, such language typically
implies purposive, muscular, rather free
actors, unembedded in their surrounding
context. Institutional theory gains little by
277
making unleashed actors the drivers of insti-
tutional change.
Institutions are reproduced through the
everyday activities of individuals. Members
of organizations engage in daily practices,
discover puzzles or anomalies in their work,
problematize these questions and develop
answers to them by theorizing them. In
turn, participants ascribe meaning to
these theories and, in so doing, develop and
reproduce taken-for-granted understandings.
Institutional transformation is often rather
subtle, not particularly abrupt, and apparent
only after a considerable period. Rather than
perspectives that either highlight habitual
replication or savvy change agents, we stress
that most micro-motives are fairly mundane,
aimed at interpretation, alignment, and mud-
dling through. And, as individuals and
groups engage in such actions and resist
others’ attempts as well, they may well trans-
form logics and alter identities.
We contend that institutional analysis needs
more attention to everyday processes than
momentous events, to less powerful members
of organizations as opposed to only leaders or
champions, and to cultural and cognitive
aspects as well as political ones. Research on
external shocks that prompt change and on
voices that catalyze transformations has been
valuable in adding insight into how institu-
tions are altered. But a more explicit focus is
needed on how the local affairs of existing
members of a field can both sustain and
prompt shifts in practices and conventions.
The ongoing activities of organizations can
produce both continuity and change, as such
pursuits vary across time and place.
There is presently much interest in under-
standing institutional change, as attention has
shifted from early concerns with persistence
and convergence to growing concern with
dynamics and contestation. We welcome this
development, but worry that too many analyses
conflate macro-factors with structural forces
and assume these factors only reinforce stabil-
ity and homogeneity, while associating micro-
factors with entrepreneurship and agency.
But individuals also play a powerful role in
278 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
maintaining the social order, and organizations
can serve as entrepreneurs. Moreover, macro-
trends, such as globalization, can be pro-
foundly destabilizing to local orders and
individuals. It is a mistake for institutional ana-
lysts to blindly equate change with the micro-
level and persistence with the macro. We need
to develop multi-level explanations that
account for recursive influences.
Some attention has already been paid to
micro-translation, or an understanding of how
macro-categories get inside the heads of indi-
viduals (Jepperson, 1991). Macro-framings
or values can be ‘pulled down’ to the every-
day level of practice, as varied activities can
be pursued under a common interpretation or
account, or diverse practices can be pursued
in the search of a common goal (Colyvas and
Powell, 2006; Colyvas, 2007a). Indeed, many
micro-processes represent local instantiations
of macro-level trends. We need a parallel
effort to link key micro-concepts, e.g. iden-
tity, sense making, typifications, frames, and
categories with macro-processes of institu-
tionalization, and show how these processes
ratchet upwards. This linkage between levels
holds promise to better explain institutional
dynamics. Attention to the mediating role of
language, interaction rituals, and categories
will help explain how organizational routines
and rules develop, stick, and fall into disuse.
BUILDING BLOCKS FOR
MICROFOUNDATIONS
As a rough approximation, we divide the lit-
eratures we discuss below into two main
groupings. The first draws on arguments that
adopt a ‘built-up’ focus, in which micro-level
rituals and negotiations aggregate over time.
These local influences may bubble up and
threaten or replace macro-level coherence.
The second line of analysis focuses on how
macro-orders are ‘pulled down,’ and become
imbricated in local or particular cases, situat-
ing macro-effects inside organizations and
individuals. Both streams of research are vital
to building microfoundations for institutional
theory, but it is important to attend to the dif-
ferent directions of the causal arrows in these
research traditions.
There is, of course, an exceedingly broad
literature in social psychology. Our goal is
selective, that is, to cull useful work that
complements the arguments that have char-
acterized institutional theory and aid in
explaining the creation, transformation, and
impact of institutions. To this end, we draw
on research that highlights constructivist
processes. To illustrate, consider the verbs
typically used in the literatures we highlight.
With interactionist arguments, scholars
commonly use the terms saving face or
affirming. In ethnomethodology, negotiate
and improvise have primacy. With sensemak-
ing, enact is the standard bearer. Research on
legitimation processes finds associated with,
orient towards, comply with, and accept.
Note that we rarely find words like choose,
plan, or determine (see Weick, Sutcliffe, and
Obstfeld, 2005 for a lovely discussion on this
point). These verbs are more constructivist,
constitutive and interpretive than calculative
or purposive. The individuals in these
theories behave, but they seldom choose
(see discussion in DiMaggio and Powell,
1991: 7–11).
Many of the writings that provided the ini-
tial microfoundations for institutional theory
date from 1967 – Erving Goffman’s
Interaction Ritual, Harold Garfinkel’s
Studies in Ethnomethodology, and Berger
and Luckman’s The Social Construction of
Reality were all published in that propitious
year. It is notable that we continue to draw on
this work that is more than four decades old.
In their canonical article, Meyer and Rowan
(1977) observed that much ceremonial activ-
ity, and accompanying categorical rules, gen-
erates conflict and uncertainty in day-to-day
activities. They proposed that organizations
resolve these tensions through decoupling
and a logic of confidence. Drawing on
Goffman (1967: 5–45), they invoked his idea
of ‘maintaining face.’ Crafting a distinction
between the public face and backstage
reality, overlooking or avoiding anomalies,
 MICROFOUNDATIONS OF INSTITUTIONAL THEORY
minimizing discordant signals, and decou-
pling formal procedures and structures from
everyday work are all steps taken to maintain
the assumption that organizations are acting
appropriately and that larger rationalized
myths are sustained. This ‘logic of
confidence’ is crucial to maintaining an
illusion of consensus within schools, for
example.
DiMaggio and Powell’s (1991) overview
of the elements of a theory of practical action
also drew on microfoundations, using an
ensemble of ideas from Simon (1945),
Garfinkel (1967), and Giddens (1984).
Responding to readings of their 1983 article
that contended that mimetic and normative
isomorphism entailed ‘mere’ copying and
replication, DiMaggio and Powell empha-
sized that practical consciousness involves
energy, effort, and reflection. Drawing on
Simon (1945: 79–109), they recognized that
habitual action does not reflect passivity, but
is a skilled means of directing attention.
Garfinkel (1967) contributed the critical
insight that everyday reasoning requires indi-
viduals to negotiate rules and procedures
flexibly and reflexively to assure themselves
and others around them that their behavior is
sensible. Giddens’ (1984: 54) observation
that sustaining social interaction is the ‘basic
security system’ of the self, and that control
of human anxiety is the ‘most generalized
motivational origin of human conduct’ was
also influential. DiMaggio and Powell’s ini-
tial outline of a theory of practical action was
brief, but it clearly attempted to build on
microfoundations. We seek to continue and
deepen that discussion, and build on others
who have made contributions in recent years
(Jennings and Greenwood, 2003; Lawrence
and Suddaby, 2006; Weber and Glynn, 2006;
Lounsbury and Crumley, 2007;).
Interaction rituals
Goffman (1967) was keenly aware that indi-
vidual capability at ‘face work’ varied con-
siderably, but that such variation pertained
279
‘more to the efficacy than the frequency of its
application’ (p. 13). Skill at face-work is a
distinguishing feature that differentiates indi-
viduals. He was also very cognizant of how
interaction rituals connected to the larger
social order. Goffman himself was a highly
skilled card player, and he drew a distinction
between ‘the value of a hand drawn at cards
and the capacity of the person who plays it’
(p. 32). Not only are the rules of how cards
are played highly governed, a reputation for
good or bad play is a face that requires main-
taining. Such micro-encounters at a card
table represent sequences of coordinated
understandings from which social interaction
is accomplished.
For Goffman, speech, expressive behavior,
and demeanor embody intentions, but these
individual instruments are ‘governed’ by the
normative order of society. In Asylums,
Goffman (1961) discussed how organizations
instill tacit acceptance and conformity
through inducements. But in his work on
face-saving, he emphasized how individuals
use talk, with ritual care, to present an image
of self-control and dignity. While standards
and rules ‘are impressed upon individuals
from without,’ the particular rules an individ-
ual follows derive ‘from requirements estab-
lished in the ritual organization of social
encounters’ (Goffman, 1967: 45).
Ethnomethodology
While Goffman emphasized how facility at
everyday interactions sustains face, Harold
Garfinkel, one of Talcott Parsons’ favorite stu-
dents, developed a distinctive line of inquiry
that stressed the skills that emerge out of
everyday encounters, which generate sociabil-
ity and reproduce the social order. His eth-
nomethodological approach has provided
tantalizing insights for institutional theory,
most clearly in Zucker’s (1977) work, where
she argues that many taken-for-granted under-
standings are ‘built up’ from the ground level
by participants in interactions, and in
DiMaggio and Powell’s (1991: 22–27)
280 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
sketch of a theory of practical action.
Ethnomethodology never developed into an
expansive subfield, and given both its cult-like
approach and the controversies it provoked,
perhaps it never had the chance.1 Nevertheless,
Garfinkel’s focus on practical reasoning and
the role of ‘accounts’ in normalizing and legit-
imating the social order offers considerable
insight into the implicit and contested assump-
tions that make organizational life possible.
Rather than find social order in cultural norms
or social roles, ethnomethodologists examine
the cognitive work that individuals do to assure
both themselves and those around them that
their behavior is reasonable.
There are several compelling reasons to
revisit this line of work. Contemporary
scholars are largely unaware of just how
much of this research focused on work and
organizations. Meticulous studies of record-
keeping procedures in juvenile justice facili-
ties (Cicourel, 1968), high mortality wards in
hospitals (Sudnow, 1967), and psychiatric
clinics (Garfinkel and Bittner, 1967) reveal
how counting, reporting, and legal require-
ments are often highly improvised, as veteran
staff draw on deep, tacit knowledge of how
reports ought to be assembled. Other work
examined case files, folders, and dockets to
ascertain the classification schemes used in
psychiatry or a public welfare agency, where
documents could be treated either as ‘plain
facts’ or the opportunity to construct an
account that provides grounds for accepting
the testimony of the document against the
testimony of the welfare applicant
(Zimmerman, 1969).
Bittner’s (1967) studies of policing on skid
row illuminate how officers performed com-
plicated and demanding work with relative
ease, without any real personal or peer recog-
nition of their skills. Given that the destitute
and mentally ill were often the objects of
police work on skid row, perhaps the lack of
high regard is to be expected. But Bittner
underscored how strongly a powerful sense
of craftsmanship among the police was ren-
dered routine, even as it went unacknowl-
edged. Similarly, Sudnow (1965) analyzed
how the penal code was used by public
defenders with great facility. Lawyers took
into account a welter of ‘facts’ – the ecologi-
cal characteristics of a community, the
biographies of criminals and victims, and
past records of criminal activity. They trans-
formed a criminal action into a shorthand
representation that was intelligible to attor-
neys and judges. Sudnow’s brilliant analysis
revealed how delicate teamwork between the
offices of public defender and public prose-
cutor in the face of a demanding organiza-
tional calendar jointly facilitated the
construction of ‘normal crimes,’ a proverbial
characterization that certain kinds of illegal
actions were typically committed by particu-
lar types of people. Once such categoriza-
tions were made, plea bargaining ensued,
based on unstated recipes for reducing
original charges to lesser defenses to avoid
the costs of trial.
In ethnomethodological studies, categories
and classifications become interpretive
schema that members of organizations draw
on. Over time, these schemas become a
repository of organizational knowledge. As
particular schemas become routinized
through repeated application and use, they
develop a habitual, taken-for-granted
character. Berger and Luckman (1967)
emphasized that once joint activities are
habitualized and reciprocally interpreted,
patterns both harden and deepen as they are
transmitted to others, particularly newcomers.
When schemas become perceived as objec-
tive, exteriorized facts, their contingent ori-
gins are obscured. Organizations do have
rich and varied repertoires, however, and
multiple schemas are available. The possibil-
ity of mixing or combining practices in alter-
native or novel ways to produce different
patterns is ever present.
Throughout this rich vein of research, eth-
nomethodologists demonstrate how classifi-
cations and categorizations are invoked on
the fly by skilled actors to keep peace on the
streets, in the courts, in hospital wards, and
welfare agencies. Consider the contrast of
this view with the conception of organization
 MICROFOUNDATIONS OF INSTITUTIONAL THEORY
found in many other lines of organization
theory. Rather than struggling with or coping
with uncertainty, the practical reasoning view
emphasizes how situations are rendered
comprehensible, and sees such efforts as an
ongoing, contingent accomplishment. In
contrast, ever since Weber, most students of
organizations regard formal structures and
procedures as ‘ideally possible, but practi-
cally unattainable’ (Bittner, 1965). Selznick
(1949), for example, attributed these limita-
tions to the recalcitrance of the tools of
action; while Weber conceived of the typical
bureaucracy more as a target or an idealiza-
tion. For the ethnomethodologists, however,
bureaucracy is neither a rarified nor lofty
goal, but deeply embedded in common-sense
routines of everyday life. Organization is a
formula to which all sorts of problems can be
brought for solution (Bittner, 1965).
This focus on practical reasoning as a
routine accomplishment emphasizes how
people in organizations both make and find a
reasonable world.2 Organizational life entails
constant doing and achieving. For Goffman
and Garfinkel, social order is created on the
ground floor, through situated local prac-
tices. As practices are reproduced over time
and across settings, macro-categories emerge
from these interactions and negotiations.
Performativity
Across the Atlantic, a companion line of
work known as actor-network theory has
developed in France, focusing on scientific
research and practical applications of science
outside the laboratory (Latour, 1987).
The core assumption of these studies is that
laboratory life often requires scientists to
create material conditions in which theory
and reality can be juxtaposed and in so doing
create affordances that make science ‘work’
(Latour and Woolgar, 1979; Callon, 1986).
Callon (1998) has recently expanded the
actor-network approach to the field of
economics, and analyzed how market par-
ticipants think about economics and act in
281
relation to one another and to the market
through their models and artifacts.3 This
approach to ‘making markets’ resonates with
core themes of ethnomethodology in the
view that phenomena only exist in the
‘doing’ and social relations have to be
continuously performed in order to persist.
For Callon (1998, 2006), a discourse is
performative if it contributes to the construc-
tion of the reality that it describes. Callon
(2006) is careful to distinguish the idea
of performativity from Goffman’s imagery of
the presentation of self and from Merton’s
(1948) notion of a self-fulfilling prophecy.
A self-fulfilling prophecy often has a
pathological form of influence or entails a
misconception of the situation. In contrast,
performativity is not arbitrary, rather
there are contests associated with
performance. Success or failure become
clear at the end of struggles, when opposi-
tion, controversy and cooperation are sorted
out. The general claim of this line of study is
that such diverse domains as science,
technology, accounting, marketing, engineer-
ing, and even friendship are all arenas where
activities, relationships, theories, and tools
are both created and enhanced by their
performance.
The Scottish sociologist Donald
MacKenzie has been highly influential in
developing and studying the idea of ‘the per-
formativity of economics.’ He has, with his
students, studied many of the major eco-
nomic innovations of the late 20th century,
viewing economists and their theories and
tools not only as describers and analysts, but
as participants and inventors. Mackenzie and
Millo’s (2003) research on options trading,
which ‘with its cognitive complexity and
mature mathematical models has been a cen-
tral driver of the marketized, mathematicized
risk-evaluation culture’ of modern life, shows
that the famous Black, Scholes and Merton
model did not describe an already existing
world. When first introduced, the model’s
assumptions were unrealistic and prices dif-
fered systematically from it. But with its
growing use and prevalence, option prices
282 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
began to exhibit a near-perfect fit to the
values predicted by the model.4 Clearly, tech-
nological and computational improvements
played a role in the acceptance of options, as
did the elite status of the authors of the
model, but options pricing came to shape the
way participants thought and talked about
finance, and altered the understanding of
volatility and arbitrage. MacKenzie (2006)
does not consider a financial model to be a
camera capturing reality, but an engine that
allows traders to explore and exploit eco-
nomic phenomena.
Abstracting from this important case,
MacKenzie (2006) argues that performativity
entails transformation: an aspect of econom-
ics must be used in a way that has effects on
the economic processes in question. The
model or tool, he argues, must make a differ-
ence, that is economic processes that incor-
porate this element of economic reasoning
must differ from processes where it is not
used. MacKenzie takes pains not to portray
modern economists as rational, calculating
agents but as human beings, limited in their
cognitive capacity and susceptible to social
influence. Nor does he fully embrace a view
that businesses in the U.S. and around the
world have become ‘financialized,’ and
attend solely to market-value maximization,
even though his superb analysis of the legiti-
mation of options pricing provides consider-
able evidence for such an argument. Instead,
his focus on performativity illuminates how
human beings can ‘achieve outcomes that go
beyond their individual cognitive grasp’
(MacKenzie, 2006: 268). By stressing human
cognitive limits and the distributed nature of
cognition in contemporary organizations,
this line of research demonstrates how the
‘social’ and the ‘technological’ come
together to constitute markets.
We turn now to other micro research pro-
grams that also focus on how everyday prac-
tice in organizations produces meaning –
whether in the form of accepted routines or
legitimated models. These other approaches,
we contend, emphasize more that interaction
often draws on the larger social order, as well
as accumulated experience, to interpret and
produce organizational life. These strands of
social psychology attend less to emergence
and performance, and more to interpretation,
appropriateness, and meaning making.
Sensemaking
Karl Weick’s research program on sensemak-
ing addresses how people enact order and
coordinate action. Individuals convert cir-
cumstances into action through the reciprocal
interpretation of who they are and how they
understand their environment (Weick, 1995).
Identity, the enacted world, and accepted
mental models are all key to this perspective.
Taken together, sensemaking is the locus of
how ‘meanings materialize that inform and
constrain identity into action’ (Weick,
Sutcliffe, and Obstfeld, 2005: 409).
Weick and colleagues draw on many
strands of microsociology to fashion their
approach. Garfinkel’s (1967) insight that
rationality is constructed through common-
place interactions is emphasized; so is
Goffman’s (1974) use of frames as providing
a structure to social context. Sensemaking
analyses share with ethnomethodology a
methodological stance of privileging cases
that reveal rather than represent.5 But there
are notable distinctions as well. While the
ethnomethodologists highlight the cognitive
work of individuals in creating social order,
sensemaking attends to the contingent influ-
ences of norms and role structure. For Weick,
conceptions of identity and logics of action
are relational, constructed not only through
projections of self and others’ perceptions,
but also through scripted interactions in rela-
tion to what others are ‘supposed to do.’
Individuals are enmeshed in a structure of
relationships, taking cues from both situa-
tions and others, and these guideposts
provide substance for them to enact their
environments.
In his analysis of the Mann Gulch fire dis-
aster in Montana, Weick (1993) demonstrates
how a breakdown in sensemaking explains
 MICROFOUNDATIONS OF INSTITUTIONAL THEORY
what went wrong in a seemingly routine
encounter for a highly trained crew. The dis-
integration of the crew’s routines in the face
of unexpected conditions impeded the fire-
fighters’ ability to draw on their stock of
experiences to generate a novel means of sur-
vival, or to comply with their leader who did.
Weick attributes the tragic deaths of these
skilled men to three features: a breakdown in
role structure among members of the team, a
stalwart adherence to a less critical catego-
rization of the fire, and practical challenges
to their identities as firefighters. All of these
features are reflected in the difficulties that
the firefighters faced to make sense of who
they were, the situation they encountered,
and the repertoire of actions they should take.
Because the stock of experience of the fire-
fighters did not match their anticipated, less
critical categorization of the fire when they
arrived on the scene, the situation was
rendered meaningless, as ‘less and less of
what they saw made sense’ (Weick, 1993:
635). Cues from other firefighters, e.g. stop-
ping for dinner and taking pictures, rein-
forced a spurious categorization of the fire
and impeded the firemen’s ability to activate
a different course of action. When the leader
of the crew, confronted with looming disas-
ter, lit a fire in the only escape route, lay
down in its ashes, and called on his crew to
drop their tools and join him, the team disin-
tegrated. The firefighter’s identities hindered
their ability to comprehend an order to drop
the very materials that defined who they were
and comprehend the practicality of a solution
that would have saved their lives. Weick’s
analysis demonstrates that even very effec-
tively trained and organized teams can
falter when ‘the sense of what is occurring
and the means to rebuild that sense
collapse together’ (1993: 633).
From a sensemaking view, many features
of organizational life are uncertain, which
relates to ignorance or the inability to esti-
mate future consequences to present actions.
Organizational life is also wrought with
ambiguity, which reflects the inability to
attribute clear, mutually exclusive categories,
283
codes or specifications (March, 1994; Weick,
1995). These distinctions are important
because while information can provide a
remedy for uncertainty, it can also further
ambiguity, as evidenced by the Mann Gulch
fire when new information did not fit precon-
ceived categories. Weick also draws on
Garfinkel to emphasize that equivocality is
present when numerous or disputed interpre-
tations exist. As with Garfinkel’s jurors, indi-
viduals may justify multiple, incompatible
accounts, often with the same evidence.
Weick argues that uncertainty, ambiguity,
and equivocality may occasion different trig-
gers to, and remedies for, sensemaking.
A notable feature of sensemaking studies
is a focus on situations where apparently
normal events go badly awry.6 Sensemaking
emphasizes interpretation and (mis)percep-
tion of the environment, especially where
received wisdom is poorly aligned with
current context. For example, Scott Snook’s
(2000) examination of the 1991 ‘friendly
fire’ incident when US F-15 fighter pilots
shot down their own Black Hawk helicopters
in peacetime over the Persian Gulf, demon-
strates how an organizational failure may
occur without anything breaking or anyone
to blame. Snook attributes this tragedy
to a slow, gradual drift away from globally
synchronized logics of action, encoded in
written rules and procedures, to locally gen-
erated task-based routines. Such ‘practical
drift’ is often manifested locally as adapta-
tion because individuals organize around
the immediate demands of work, and thus
learn and adjust to their own realities. Similar
to Mann Gulch, where the smokejumpers
ignored cues that the fire was more serious
than categorized, the F-15 fighter pilots
were unable to identify that the helicopters
were not the enemy. In both settings,
the individuals attended to cues that fit
their expectations, missing numerous con-
trary signals. Futhermore, like the smoke-
jumpers, the fighter pilots relied on each
other and their team for coordination, and
their responses reinforced their mistaken
interpretation.
284 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Through an analysis of the complexities of
command in military missions, Snook
demonstrates how meaning trumped deci-
sionmaking as context, identity, and the
enacted environment constrained interpreta-
tion and shaped action. The F-15 pilots had
to identify ‘what was going on’ before taking
any action, and their interpretation was con-
structed through who they were, prior expe-
rience, the pre-flight context, and social
interactions (Snook, 2000: 81). Sadly, their
inaccurate reading led them to shoot down
their comrades in broad daylight.
Sensemaking provides important insights
to the analysis of meaning, particularly the
idea that meaning making is not only about
creation but also contingent expression. For
Weick, the key to identifying such instances
rests on the view that sensemaking is inher-
ently retrospective and precedes action
because situations are only understood upon
completion.7 Meaning is shaped through
attention to what has already occurred, and is
therefore directed, not attached, to action.
This contrast emphasizes the influence of
what is current to perceptions of the past.
Thus, ‘… anything that affects remembering
will affect the sense that is made of remem-
bering’ (Weick, 1995: 26). Furthermore,
since outcomes and subjective objects are
implicit in interpretation, sensemaking
entails a process that simultaneously enacts
identity and environment. Identity is central
because individuals act based on who they
are, not on what choices they have, and this
feature is constituted out of the process of
interaction. Mead’s (1934) insight that each
individual is a ‘parliament of selves’ and that
‘social processes precede the individual
mind’ are critical. The environment is not
viewed as a fixed and stable reality, but as a
co-construction of individuals’ minds and
their actions. Enactment represents the recip-
rocal interaction of the material and the
cognitive world. Thus, individuals and envi-
ronments are mutually constitutive.
This feature extends the process of
sensemaking beyond interpretation. Weick
(1995: 13–14) likens the distinction between
sensemaking and interpretation as the differ-
ence between discovery and invention.
Interpretation, with its focus on identification
and understanding vis-à-vis a wider reality,
relates to discovery, which implies that
something is evident and needs to be recog-
nized or approximated. Features of the world
are pre-given or ready-made. Sensemaking,
in its focus on process and generation, relates
to invention, which emphasizes how images
of a wider reality are created, maintained and
rendered objective. Much as action precedes
sensemaking, sensemaking is a precursor to
interpretation.
A sensemaking approach directs attention
to the importance of language, routines, and
communication for analyzing micro-
processes. While emphasizing that various
institutional materials are commonly ‘pulled
down’ by individuals and translated within
organizations, these processes may differ
across circumstances. Multiple modes of
meaning making occur at the interface
of identity and the enacted environment,
and how such understandings are forged and
enacted occurs through retrospection.
Sensemaking is thus a key micro-mechanism
of institutionalization that allows considera-
tion of both the ‘cognitive complexities’ that
guide organizational behavior and recogni-
tion of the varied ways that institutionalized
practices operate at the micro-level (Jennings
and Greenwood, 2003).
Status expectations
Research on expectation states provides
a further point of discussion of how
macro-categories guide micro-interactions
(Berger, Ridgeway, Fisek, and Norman, 1998;
Correll and Ridgeway, 2003; Zelditch, 2001,
2004). This line of research views legitimation
as a process shaped by interpersonal status
hierarchies, in which individuals draw on
widely shared cultural beliefs concerning
status and success. These referential beliefs
are evoked in situations as both guides
for interaction and as ready accounts, creating
strong expectations as to the types of
 MICROFOUNDATIONS OF INSTITUTIONAL THEORY
individuals who are or should be influential in
specific circumstances. In this fashion, broader
understandings about who and what is appro-
priate guide local circumstances, and these
interactional processes further reinforce cul-
tural beliefs about what characteristics and
practices are perceived as appropriate.
Research on expectation states and legiti-
mation analyzes the emergence of status
within task groups, observing that power and
prestige are often accorded based on social
stereotypes regarding gender, race, age, edu-
cation and occupation. In turn, these charac-
terizations shape and legitimate the manner
in which group members evaluate one
another (Ridgeway and Berger, 1986;
Ridgeway and Walker, 1995). Thus, assign-
ments of status draw readily on the macro-
stratification system, while the assignments
and rewards that ensue at the group level
reinforce the larger social order.
Put differently, micro-level consensus is
generated through a process in which values
and beliefs from the larger society are pulled
down into local circumstances, creating dif-
ferential expectations about the performance
of individuals in task groups. These expecta-
tions can become taken-for-granted features
of organizations, and persist even if they are
unjust or unproductive, thus giving them an
‘objective’ quality.
Owen-Smith (2001) analyzed a neuro-
science lab and the rankings of a community
of colleagues with respect to experimental
and analytic ability and productivity. He
found that assessments of ability and accom-
plishment are not neatly correlated. Instead,
position in the lab’s prestige order was
heavily shaped by expectations that accrue
with rank and discipline, and whether one
was dependent or autonomous in regards to
funding. In this academic research setting,
gender as a status measure was less conse-
quential than stereotyped expectations based
on disciplinary affiliation.
Research on expectation states offers
another lens through which to view how
widely shared societal beliefs become incor-
porated and reinforced at the work group
285
level. This line of work emphasizes that it is
in the conduct of tasks that social objects and
categories drawn from the larger society are
rendered legitimate. This perspective
complements sensemaking by stressing how
external social statuses are manifested in
everyday activities.
MICRO-PERSPECTIVES ON
INSTITUTIONAL CHANGE
We turn to a discussion of two examples of
recent transformations that have typically
been analyzed in terms of broader social and
political currents. In both settings, exogenous
forces loom large in current explanations.
When attention is directed to the organiza-
tion level, most reports celebrate risk-taking
entrepreneurs. In contrast, our aim is to
demonstrate how much explanatory power
can be garnered by examining the micro-
level processes underpinning these changes.
We underscore how the ‘entrepreneurs’ did
not even consider that they were taking risks,
but instead were responding to unanticipated
situations.
Universities and academic
entrepreneurship
In recent decades, U.S. universities and the
profession of academic science have under-
gone a profound transformation in the way
science is conducted. Where university and
industry were once separate domains, public
and private science have become intermin-
gled, notably in the norms and practices
related to career advancement and in the
development and dissemination of knowl-
edge. Patenting and licensing academic
research findings, taking equity in start-ups,
and encouraging academic entrepreneurship,
have become core features of how U.S.
universities define success.
Most studies of this transformation stress
either pecuniary interests or national policies
286 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
(Lach and Shankerman, 2003).8 Indeed, aca-
demic institutions made more than $1.385 bil-
lion in gross revenues in fiscal year 2004 from
technology licenses (AUTM, 2005). Before
1980, there were fewer than 25 university tech-
nology transfer offices, and today there are
well over 200 (AUTM, 2005). Clearly, some
universities are profiting considerably from
technology licensing, and virtually every
research university now has a technology
transfer office. Government policy has
strongly encouraged such efforts. The Bayh-
Dole Act in 1980 authorized universities to
take title to patents generated by federally
funded research. A Supreme Court decision in
the same year, Diamond vs. Chakrabarty,
authorized the patenting of life, providing a
catalyst to the emerging biotechnology indus-
try. A few universities, namely University of
Wisconsin, Stanford, MIT, and UCSF are cred-
ited for shaping the way in which technology
transfer became organized (Mowery, Nelson,
Sampat and Ziedonis, 2004). Many organiza-
tional accounts point to the founders and con-
sultants to university tech transfer programs as
the key institutional entrepreneurs for the new
university models (Mowery et al., 2004). One
of these founders, Niels Reimers, created the
Stanford University Office of Technology
Licensing, a highly successful operation on
which other technology transfer offices have
modeled their operations. Reimers went on to
reorganize programs at MIT and UCSF, and
consult to many other universities in Europe
and Asia. The ‘Stanford Model’ is practically a
household term in the technology licensing
community, emphasizing a marketing focus,
service to faculty, and a lauded ‘incentive
system’ of a 1/3 division of licensing royalties
shared equally among the department, school,
and scientists.
A careful analysis of archival records and
interviews with participants at Stanford
University suggests an alternative account in
which current practices evolved from con-
flicting conceptions about commercializing
science. Colyvas (2007a) analyzes scientists’
engagement with commercializing life
science inventions at Stanford in the 1970s,
long before the Bayh-Dole legislation or
significant financial returns from university
patents. By examining archival records of
invention disclosures of biological scientists,
Colyvas identifies how practices took shape
in advance of external policy developments,
how individual scientists pursued disparate
entrepreneurial actions, and how these
actions were facilitated and anchored by
organizational procedures. In the perform-
ance of technology transfer, commercializing
science was re-shaped and became
institutionalized.
In the 1970s, commercialization efforts
emerged from scientists’ labs when routines
for technology transfer were ambiguous
and unfamiliar. Unfamiliar projects included
the importation of the legal categories of
inventor and invention, the problem of
establishing boundaries between business
and science, and the necessity to establish
procedures for distributing royalties. This
ambiguity created opportunities for
interpretation by both scientists and adminis-
trators. Scientists, in the context of their
laboratories, generated multiple accounts
of who was an inventor, what kinds of
science constituted an invention, as well as
divergent views of how material benefits
from commercial involvement could legiti-
mately be used.
For example, within a basic life science
department that eventually became a hotbed
of academic entrepreneurship in the 1990s,
early efforts in the 1970s were fraught
with uncertainty. Three examples from
this department are illustrative. One
distinguished scientist, concerned with his
reputation, allowed the university to license
his basic biological research tool only with
hesitation and declined any personal royal-
ties, agreeing to participate only after secur-
ing agreement to donate his proceeds. ‘I can
accept a view that it is more reasonable for
any financial benefits … to go to the univer-
sity, rather than be treated as a windfall profit
to be enjoyed by profit motivated businesses;
I agreed to cooperate … for that reason …’
(Colyvas, 2007a: 465). Another noted
 MICROFOUNDATIONS OF INSTITUTIONAL THEORY
scientist, motivated by how industry develop-
ment of his invention would disseminate his
technology and expand his research program,
reasoned that royalties should benefit his
laboratory, the locus of the effort for the
research. ‘Many ‘inventions’ are really the
work of a group … Although inventors need
to be identified in the technical sense to sat-
isfy the requirements of the patent process, in
fact, the most important advances often are
made by other members of the group …’
(Colyvas, 2007a: 464). This scientist refused
to patent basic biological materials, stating
that patenting was neither necessary nor
appropriate for their dissemination, but he
believed that strong property rights for
device inventions were important. A third
scientist, angered at companies’ lucrative
exploitation of academic science, demanded
remuneration to the university: ‘Although
many of us are not in a position to exploit our
discoveries, we do feel that universities …
should benefit from profitable applications of
our findings. I had hoped that an industry so
recently spawned by university research
would be enlightened in its recognition of
who is responsible for its existence …’
(Colyvas, 2007a: 467) He also threatened
corporate partners that he would patent
‘everything in sight’ in order to beat industry
at their own game.
These examples provide evidence of
significant variation in how scientists in one
department at the same university practiced
commercialization differently and ascribed
meaning to what they did. In the first exam-
ple, the scientist utilized an enduring vocab-
ulary from the profession of science, stating
that his contribution to a discovery was only
because he was ‘standing on the shoulders of
giants’ and could not identify himself as an
inventor by profiting personally from a
patent. He invoked the legitimacy that is
accorded to the scientific enterprise, and the
expectations that flow from it. In the second
example, political and ideological references
provided resources for justifying practices
and generating claims of ‘team effort’ that
the laboratory was communal and organized
287
to benefit everyone equally. In the third
example, the scientist theorized cause and
effect in response to his perception of a crisis
over industry exploitation, control and
justice: ‘I assure you that I will alert my
colleagues throughout the world to guard
against what I consider exploitation’
(Colyvas, 2007a: 467).
The variation in responses reflects a
profound tension between public and private
science at the incipient stages of technology
transfer. Attention to micro-processes,
however, demonstrates how much meanings
were generated through practical action as
local, experiential aspects of the laboratory
and scientists’ identities and emotions inter-
acted to construct an appropriate conception
of academic entrepreneurship. These scien-
tists were neither cultural dopes nor institu-
tional heroes. As much as they recognized
the unfamiliarity of their industry ties and
questioned the legitimacy of their activities,
they were also aware of the opportunities and
benefits of their actions. Involvement in
entrepreneurial science was not simply
repeated and habituated, however. As
practices were executed, they were also
altered and justified anew, as the same indi-
viduals and their peers tried their hand at
subsequent inventions. The organization of
the laboratory and the ethos embedded in it
informed how technology transfer would be
performed.
The organizational ambiguity attached to
definitions of inventor and invention, and
procedures associated with commercializing
science such as royalty distribution, provided
multiple opportunities for generating
disparate meanings and practices. These
individual approaches resonated with the fac-
ulty members because they drew on their
familiar identities and ideals as scientists in
meaning-making processes. As the world of
science came into contact with commerce,
the identity associated with a university
scientist expanded to include entrepreneur-
ship. As more high-status elite scientists par-
ticipated in such activities, commercial
involvement transitioned from unfamiliar
288 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and unusual to plausible and appropriate,
and finally to a core component of a scien-
tific career (Colyvas and Powell, 2007). By
engaging in the unfamiliar and making it
plausible in the context of academia,
scientists transformed what it meant to be a
scientist. Their involvement helped render
the older model of ivory tower science quaint
and these new entrepreneurial activities
indicative of engagement (Colyvas and
Powell, 2007).
A parallel feature of the institutionaliza-
tion of commercial science was the establish-
ment of routines and practices that created
and normalized activities. Colyvas and
Powell’s (2006) analysis of 31 years of tech-
nology transfer archives at Stanford
University demonstrates the importance of
the instantiation and codification of two core
institutional features – legitimacy and taken-
for-grantedness – into organizational rules
and procedures. They show how the develop-
ment of conventions extended academic
science further into the industrial realm, and
how the integration of universities and
companies into a community of common
interests became desirable and appropriate.
Once prohibited from consulting to compa-
nies that commercialized their technologies,
academic scientists became emulated for
their multiple roles as founders, scientific
advisory board members, and equity holders.
Conflict of interest policies and reporting
requirements occasioned these opportunities,
shaping and reinforcing the appropriate
form that entrepreneurship would take.
Social and technical categories provided
windows into the core cognitive features of
taken-for-grantedness. The criteria that dis-
tinguished an ‘inventor’ from a co-author, or
an ‘invention’ from a research publication
were transformed from points of elaborate
discussion to well-understood, highly
scripted routines and guidelines. The kinds
of responsibilities and expectations that
would be imposed on scientists in the
commercialization process also underwent a
similar process of elaboration and subse-
quent compression. Invention disclosure
forms, boilerplate letters of agreement, and
marketing tools were developed and
revised in order to anchor and support on-
going efforts at clarification. As categories
became settled, roles were more defined
and practices well rehearsed. Job titles, con-
flict-of-interest guidelines, and organiza-
tional routines developed to sustain these
activities. Eventually, there was little need
for articulation or explicit expositions
of the premises and rationales that char-
acterized scientists’ early engagement in
entrepreneurship.
Language and meaning played an impor-
tant harmonizing role at the organizational
level as the vocabularies utilized in this set-
ting transformed over time. In the early
years, commercializing science was pursued
as an exception rather than the rule, justified
for the ‘benefit and use of the public.’
As university technology transfer gained
legitimacy and the once sharp boundaries
between university and industry blurred, a
more local, institutional vocabulary
took form. Finally, during the later stages
of institutionalization, the language of
entrepreneurship and academic mission
became integrated into a common identity
of public benefit, profession, and practical
action. The language of science and
the mission of the university to benefit the
public endured, yet the conventions associ-
ated with them were redefined as the institu-
tionalization process unfolded. We see
similar processes of unexpected circum-
stances becoming routinized, and made
sensible in our second case, to which we
now turn.
Earned income and nonprofit
organizations
Commercialization is a much discussed
topic in the nonprofit world. More and more
nonprofits are pursuing commercial activities
to secure funds, and turning to earned
income activities to boost their budgets.
The fiscal challenges faced by nonprofits are
 MICROFOUNDATIONS OF INSTITUTIONAL THEORY
considerable and many external funding
sources now demand and support more entre-
preneurial approaches (Powell, Gammal, and
Simard, 2005). Not only do some funding
sources stipulate earned income efforts, but
there are a growing array of courses, pro-
grams, and elite entrepreneurs that prosely-
tize about importing entrepreneurship into
the nonprofit sector. Moreover, many non-
profits prefer to deliver goods and services in
a fashion that does not create dependency, as
they view extensive reliance on donors as a
sign of vulnerability and weakness. There is
also a widespread neo-liberal belief that
market discipline is healthy, and entrepre-
neurial activities generate autonomy and
build capabilities (Dees, 1998).
Most of the literature on earned income
activities follows two themes. One argument
stresses the need to augment the social non-
profit sector with practices from for-profit
businesses (Letts et al., 1997; Porter and
Kramer, 1999), with attention focused on the
individuals and organizations involved in the
transfer and circulation of ideas across sec-
tors.9 To these analysts, entrepreneurial ven-
tures have become the ‘hallmark’ of a
successful nonprofit. The second theme is
sung by a chorus of scholars and practition-
ers who worry that earned income initiatives
are particularly difficult for nonprofit organi-
zations and that responding to both financial
and non-financial concerns is inevitably
fraught with tension (Foster and Bradach,
2005). These discussions are healthy for
theory and practice, as they not only high-
light the tensions between making a profit
and staying true to one’s mission, but also
recognize that basing decisions solely on
mission can threaten financial survival, while
putting business concerns ahead of organiza-
tional mission can have deleterious long-
term consequences (Minkoff and Powell,
2006).
The rival metaphors of mission and busi-
ness often lead to internal strife within non-
profit organizations. For example, this
tension is manifest in an art museum between
curators – the traditional guardians of
289
art – and museum directors and entrepreneur-
ial administrators who are responsible for the
financial viability of the organization.
Debates over the benefits or disadvantages of
earned income activities seldom attend to
evidence drawn from day-to-day operations,
however. When we examine rare, successful
cases of revenue generation, we see a rather
different account in which local action has
often emerged as necessity in response to
unexpected conditions. These practical
responses triggered new steps that eventually
led to organizational changes, and connected
with much ballyhooed larger macro-trends,
but were not prompted by them. In such
cases the ethnomethodological insight that
mixing practices prompts surprise and nov-
elty can be applied to illuminate how new
forms are generated.
A notable case of successful nonprofit
entrepreneurship is Minnesota Public Radio
(MPR), one of the nation’s largest and now
richest public radio stations, known for
award-winning documentaries, innovative
programming, and extraordinary success at
revenue generation.10 Between 1986 and
2000, MPR’s for-profit ventures generated
$175 million in earned income for the non-
profit station, including a $90 million contri-
bution to its endowment (Phills and Chang,
2005). The origins of this success reveal how
strongly organizational behavior is often
constructed ‘on the fly’, and necessity is the
mother of entrepreneurship.
In the late 1970s and early 1980s, MPR
developed a satirical show called A Prairie
Home Companion. They offered the show to
National Public Radio, but NPR declined,
saying it wasn’t a show that would have
nationwide appeal. It appears that MPR was
peeved by National Public Radio’s decision
to decline the show, which fueled the desire
to make the show successful. By the early
1980s, A Prairie Home Companion had gen-
erated a fairly healthy audience, and in 1981
Garrison Keillor, the show’s popular host,
offered listeners a free poster of his mythical
sponsor, Powdermilk Biscuits. The fictitious
sponsor was part of a regular ongoing gag on
290 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
the show. To everyone’s surprise, more than
50,000 listeners requested a copy of the
poster. The station faced a $60,000 printing
bill. In such circumstances of surprise, sense-
making efforts often spring into action. And
so MPR continued the tradition of the ficti-
tious sponsor by turning it into a commercial
product. To avert financial disaster, MPR
President William Kling recalled, ‘We
decided to print on the back of a poster an
offer for other products that you could buy,
like a Powdermilk Biscuit t-shirt. The idea
worked. I think we netted off that poster,
which was really our first catalog, $15,000 or
$20,000’ (William Kling, quoted in Phills
and Chang, 2005: 65). ‘It instantly became
clear that there were things like that you
could do’ (Kling, quoted in Khan, 1995).
To tap the popularity of A Prairie Home
Companion, MPR created the Rivertown
Trading Company, a mail order catalog busi-
ness that sold mugs, t-shirts, novelties, and
eventually clothing, jewelry and items
related to Keillor’s radio show. The new
entity grew rapidly and by 1986 was reorgan-
ized as a separate for-profit subsidiary of
MPR to remove any legitimacy and tax
issues related to a nonprofit organization
owning a highly profitable business. By
1994, Rivertown Trading distributed five cat-
alogs, including Wireless, Signals, Seasons,
Circa and Classica. It also ran the US Golf
Association’s catalog. Moreover, the product
selection in its catalogs extended well
beyond its original focus on gifts associated
with the Keillor show.
The origins of Minnesota Public Radio
also had a similar ‘creation in the wild’
flavor. Back in the 1960s, the president of a
small Benedictine college in Minnesota
asked a young college graduate, William
Kling, to start a college radio station to honor
the Benedictine tradition of providing artistic
and cultural enrichment to their local
communities. Kling viewed this opportunity
in a simple manner: ‘I was doing what
I really liked to do, building something
that hadn’t been done before.’11 He likened
building the radio station to his childhood
fascination with assembling ham radio sets
and listening to distant stations.
In December 1995, MPR asked a handful
of employees to assist Rivertown Trading on
a voluntary basis to fulfill backlogged
holiday orders. MPR employees were told
that Rivertown would make donations to
their favorite charities or contribute to a
holiday party for those who volunteered.
Nine employees pitched in, working two to
three hours each, earning $350 each for their
favorite charities. The expectation at MPR
was that employees at the radio station and
the catalog company should be from
common backgrounds. Indeed, Kling, the
general counsel and other key staff were
executives at both companies. ‘We didn’t
want to hire people who worked for Lands
End or Williams Sonoma,’ William Kling
commented, ‘we wanted people who held the
values of the nonprofit.’12 This decision also
led to a firestorm of protest and controversy.
Politicians in Minnesota, newspaper
reporters, and other public broadcasting offi-
cials were highly critical that employees of
the nonprofit radio station also received com-
pensation for their work with for-profit
Rivertown Trading, and considerably higher
wages to boot. Instead of seeing routines and
organizational continuity, critics saw a pat-
tern of insider dealing, conflict of interest,
and public funding for an entrepreneurial
effort, and raised concerns of unfair compen-
sation and lack of transparency. It is not
our task here to assess the merits of
these criticisms. We note instead that
Kling and colleagues’ response was to stress
that the interests of the radio station and the
catalog company were indistinguishable.
Kling emphasized that the $4 million in
annual support given by Rivertown to MPR
over two decades exceeded the budgets of
the great majority of public radio stations in
the U.S., and the $90 million endowment
that the sale of Rivertown produced, secured
MPR’s future: ‘We could have done a lot of
good things with MPR, but suffice to say the
$175 million contribution made it possible to
do things we would not have been able to
 MICROFOUNDATIONS OF INSTITUTIONAL THEORY
otherwise.’ Rather than engage with or
respond to critics, or assume the role of
entrepreneurial champion, Kling focused on
the daily activities of a radio broadcaster:
more reporters, better signal coverage, more
investigative journalism, and the ability to
acquire struggling public radio stations in
other parts of the country.
MPR is not the only nonprofit that has
generated earned income through new or
alternative means in recent years. The chap-
ters in Weisbrod (1998) chronicle an array of
activities pursued by organizations as diverse
as the Girl Scouts, zoos and acquaria, and art
museums. As government support has
declined or stagnated, nonprofits have
increasingly turned to revenue generation.
But such efforts are most likely to be suc-
cessful – financially, organizationally, and
politically – when they flow from existing
operations. In the MPR context, success at
the catalog business built upon Garrison
Keillor’s performances. While critics opined
that ‘if Garrison Keillor ever gets laryngitis,
Bill Kling is out of business!’,13 Kling
commented, ‘My fear is that there are too
many nonprofits seeking the holy grail … if
it doesn’t come naturally to you, you
shouldn’t do it.’14
In response to growing public criticisms
in the late 1990s over the large sums gener-
ated by the for-profit operation and the hand-
some financial rewards that Kling and
colleagues reaped from the sale of the cata-
log business, Kling invoked a political justi-
fication for the activity: that entrepreneurial
efforts with Riverside Trading were
enhanced by the ‘imprimatur from the
Reagan administration that it is OK to go out
and think that way, indeed we encourage you
to think this way.’15 Interestingly, however,
none of the dozens of reports, newspaper
columns, and magazine articles written about
the situation in the 1980s or early 1990s
employed a political mandate as a rationale.
More than a decade after the fact, the signa-
ture of the Reagan era was ‘pulled down’ to
retrospectively explain the entrepreneurial
effort.
291
The story of MPR is notable for both
accomplishment and controversy. Few other
nonprofits have been so successful at revenue
generation or as agile in securing a sizeable
endowment to guarantee a sustainable future.
But rather than linking their efforts to
broader trends at social entrepreneurship,
MPR’s leadership has responded modestly to
critics, emphasizing how earned income
activities were initially a response to an
unexpected emergency. One might say that
MPR learned to perform as entrepreneurs,
rather than ‘strategize’ about this perform-
ance. Moreover, actions that critics inter-
preted as inherently conflictual and
questionable stemmed from an organiza-
tional practice that executives should oversee
the actions of both the station and the com-
pany in order to ensure values-based continu-
ity between them. This choice clearly
reflected a managerial desire to routinize the
efforts of both branches of the organization,
and to engage in sensemaking around for-
profit activities in service of nonprofit goals.
These two cases of university and non-
profit entrepreneurship illuminate how activ-
ities take form through micro-processes of
development and institutionalization.
Archival records, interviews, and vestiges of
organizational routines provide tools that
reveal instances of practical reason and the
attribution of meanings to such efforts. In the
same manner as studies address the adoption
and spread of organizational forms, these
examples underscore how practices and their
attendant meanings and identities develop
and crystallize into a form that later becomes
adopted.
The two cases we have used are admittedly
unusual in several respects. They both
involve organizations that eventually became
highly successful at activities which were
initially regarded as novel and unusual, even
questionable. As the new practices and
identities became institutionalized, the
organizations were held up for scrutiny and
debate, and then veneration and emulation
(Colyvas and Powell, 2007). One advantage
of studying these hallmark cases is there is a
292 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
rich documentary trail that can be analyzed.
Studies of how institutional practices are
formed should recognize the tradeoffs that
are entailed in the choice of cases.
Nevertheless, we think that fine-grained
attention to enterprising organizations can be
instructive, as well as analysis of how
activities do or do not spread to other venues
and are interpreted at other sites.
RESEARCH METHODS FOR STUDYING
MICROFOUNDATIONS
In this last section, we discuss various tools
that researchers can use to study the
emergence and sustainability of institutions.
Instead of assuming that institutions
reproduce themselves, we examine efforts
that lead to institutional creation and mainte-
nance, and ways of capturing these
processes.
Language and vocabulary are a first step.
These are the protocols that people use to
engage in dialogue and achieve mutual
understanding and inter-subjective aware-
ness. The next step is to see what aspects of
language become codified into formal
measures of performance and accomplish-
ment. These constructed definitions become
metrics by which people evaluate one
another. As these ‘accounts’ of performance
or activity take hold, they become reified,
that is received and accepted as normal by
their participants and adopted and emulated
by others who were not a part of their initial
creation. In this sense, local measures
become ‘natural.’ Once natural, they become
public, as the measures redefine and
reinterpret history, and evolve into models
that others aspire to, and are recognized as
guideposts of accomplishment.
Consider how start-up companies as uni-
versity spin-offs were once objects of contes-
tation and debate, when the idea of
universities engaging in commercial ventures
was nascent and questionable (Colyvas,
2007a). Eventually, debate was resolved
through the creation of formal conflict of
interest forms and procedures. Today, the
number of spin-off companies has become a
metric by which universities are assessed for
their contribution to local economic develop-
ment. With earned income efforts by
nonprofits, donors look less at the programs
they fund and which audiences they reach,
and more at the percentage of administrative
costs that are allocated to program develop-
ment. Administrative overhead has become a
key, but rather orthogonal, criteria for assess-
ing the effectiveness of nonprofits. Such
categories and metrics have become not only
tools of evaluation, but the accounts by
which organizational leaders justify their
activities.
Following the insights of ethnomethodol-
ogy, organizational record-keeping can
provide a longitudinal conversation about
how daily activities are rendered intelligible,
affirming that organizational practices are
comprehensible to others. Close examination
of organizational archives and correspon-
dence, as well as newer electronic forms such
as websites, blogs and e-mail, afford the
opportunity to witness organizational
performance, and see social reproduction at
the micro-level, as daily accounts culminate
into ongoing conversations and larger stories
about organizational purposes and goals.
One could, for example, listen to older
broadcasts of Prairie Home Companion to
assess how often references were made on
the air to the burgeoning catalog business to
discern how earned income efforts perme-
ated programming.
A sensemaking approach directs us to
follow organizational actions – the efforts of
individuals as they engage in the routines of
regular operations. This naturalistic focus on
work as skill offers insights into how social
meanings become attached to routine con-
duct. Status expectations research alerts us to
how standards of legitimacy in the broader
society inform group practice. In contrast to
other approaches, this line of work alerts us
to look for how social categories and expec-
tations in the wider environment are utilized
 MICROFOUNDATIONS OF INSTITUTIONAL THEORY
at the local level. Recall, for example, how in
the early stages of academic entrepreneur-
ship, faculty used both the norms of science
and statements about the proper organization
of their labs to communicate and interpret
their experience with a novel activity.
Sensemaking is most salient when sur-
prises happen or events are perceived to be
dissonant with past experience (Weick,
Sutcliffe, and Obstfeld, 2005). In such
instances, individuals reach into their reper-
toire of experience to make a situation fit the
immediate circumstances and allow them to
resume their actions.16 Weick suggests a
repertoire of vocabularies that direct attention
and shape action. ‘Words approximate the ter-
ritory’ and reflect resources for individuals to
convert ongoing cues into meaning by
‘edit[ing] continuity into discrete categories
and observations into interpretations …’
(Weick, 1995: 107). Weick identifies both the
content (as words) and resources (as frames)
that vocabularies take. Individuals often draw
on the vocabularies of professions and occu-
pations to understand organizational actions,
and cope with their consequences. At MPR,
for example, the organization consistently
used the language of radio broadcasting to
explain their commercial success in the cata-
log business. In this respect, their discourse
was performative, as it enacted and enhanced
the commercial enterprise. Since sensemak-
ing is primarily a retrospective process, indi-
viduals make sense of traditions by drawing
on the language of predecessors and use nar-
ratives to account for sequence and experi-
ence. Language and communication are
central, as they provide filters and constraints
on what can be said, how expressions are cat-
egorized, and conclusions retained.
Members of organizations expend consid-
erable effort at communication through
codes, categories, and metaphors. Categories
serve as boxes or bins that people, problems,
and tools get assigned to. Bowker and Star
(1999: 38) recount a lovely story from soci-
ologist Howard Becker who learned that air-
line reservations staff have a category called an
‘irate’ to characterize disgruntled customers.
293
When Becker was having a difficult interac-
tion with a reservation clerk, he calmly said
to the person, ‘I am an irate,’ and the opera-
tor responded by asking him, ‘how did you
know that word?’ and immediately sped up
his reservation. The creation, resilience, and
transmission of categories offer a particularly
useful window into organizational life as
they not only reflect daily practice but con-
nect organizations to the wider society as
they render the mundane generalizable.
Categories also contain either latent or
explicit rules for action, as they invoke
scripts that are associated with people or
problems. Studying the formation of cate-
gories in organizations is an excellent way to
connect micro-level processes with the larger
social order.
Metaphors are another topic for examina-
tion, as they provide a means of shaping the
understanding of a new experience by defin-
ing one domain in terms of another. Lakoff
and Johnson (1980: 142) suggest that
metaphors ‘… sanction actions, justify infer-
ences, and help us set goals ….’ In doing so,
metaphors offer meaning to daily activity,
often retrospectively by locating the past in
present beliefs, values, and daily tasks. The
ubiquity of metaphors renders them taken-
for-granted – in many respects invisible, yet
very salient in terms of generating and
transmitting meaning.
As one illustration, Colyvas (2007b)
examined the language used to explain
the recombinant DNA breakthrough, tracing
the thematic content in newspaper articles
and campus documents regarding break-
throughs in genetic engineering in the
1970s. The vocabulary of the time drew on
the metaphors of factories, hazards, and
contamination, which transcended both
bacteria and university. She traced the appli-
cation and flow of common language in both
public media and private, university
correspondence, following the metaphors of
factory and production in formal announce-
ments about the development of rDNA
science. The factory image was first intro-
duced in the popular press as a way to
294 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
describe this basic research tool and explain
its linkage to curing disease. Concerns over
biohazards in the popular press, however,
quickly amplified fears of contamination and
images of ‘Frankenstein genes.’ Eventually,
the production metaphor triumphed, captur-
ing a theme of therapeutic and commercial
promise. The same images quickly trans-
posed into the university setting through
marketing discussions over patenting and
licensing the breakthrough. Becoming a ‘fac-
tory’ or ‘contaminating’ the academy became
exemplars for contesting commercial efforts
at the university.
Viewed more abstractly, metaphor played
a comparable role of reducing ambiguity and
mitigating uncertainty in both science and
university settings. The application and nor-
mative tone of the same imagery, however,
differed as factory language extolled science
and technology, but simultaneously dispar-
aged universities. By analyzing the two-way
flow of metaphors in science and society,
Colyvas highlighted the ways in which
understandings are conveyed, developed, and
transmitted through metaphor, and how those
metaphors morph as they are transferred.
Such work suggests that when metaphors
become generalized in their use, they render
some features of social life ‘objective,’
but deflect attention to other aspects.
As a result, metaphors shape perceptions of
situations, problems, and analogues for
solving them. One might regard institutional-
ization as making metaphor dead. If the
surprise of metaphor is in its novel applica-
tion, then language may be understood
as a reef of ‘dead’ metaphors – that is, no
longer unfamiliar, but routine and taken-
for-granted.
The ongoing relationship between mean-
ing and action is another key area for inquiry.
These core features of social life are not
proxies for one another, but distinctive insti-
tutional elements to investigate. Attention to
what individuals or organizations do, sepa-
rately from what they mean by doing it,
should be central to the study of micro-
processes. Our earlier analysis of scientists’
engagement in entrepreneurship offers an
example. Colyvas (2007a) coded practices
and premises separately for each invention
over the first 12 years of the Stanford tech-
nology licensing program. She identified
core areas in technology transfer where insti-
tutions and resources intersected, notably in
the definitions of social and technical
categories and in how revenues from inven-
tions were disbursed. Through analysis of
correspondence archives, she discerned how
conventions developed and transformed as
scientists were introduced to the emerging
field of biotechnology. Laboratory-level
models of technology transfer that were once
coherent became fragmented. The conver-
gence and harmonization of entrepreneurial
logics was characterized by the re-attach-
ment of practices from some labs to the
meanings generated by other labs. She found
that the modern interpretation of an incentive
system for successful entrepreneurship was
the outcome of the process of institutional-
ization, rather than an input to it. Thus,
actions shape meanings as much as meanings
shapes practices (Mohr, 1998). This recur-
sive process has a dynamic of variation and
change, much like the mutation of a virus
that transforms as it spreads or comes into
contact with others. The meaning behind
patenting a scientific research finding is quite
different today from 30 years ago, and what
was once an exception for technological
necessity or currency for a career transition
out of academia has become a core
component of an academic identity in the life
sciences.
Tradition and stories offer insight into the
retrospective aspects of organization (Weick,
1995). Tradition necessarily invokes the vocab-
ularies of predecessors, reinforcing patterns of
action that have been reproduced or believed
to have existed across generations. A notable
feature of traditions is that they must become
symbolic in order to persist or be transmitted.
Stories draw on vocabularies of sequence
and experience. Patterns such as beginning,
middle, end, or situation, transformation,
and situation often provide the basis for
 MICROFOUNDATIONS OF INSTITUTIONAL THEORY
constructing narratives, drawing analogies and
causal linkages, integrating what is present to
what is absent, and what is known to what is
conjecture. When pressed about the entrepre-
neurial success of MPR, William Kling turned
to childhood memories of ham radios and the
history of outreach of the Benedictine church,
and not to a celebration of business acumen.
This discussion was offered as an entry
into methods for studying processes of
micro-institutionalization. As a next step, an
analysis could distinguish between meanings
and practices in cross-case comparisons over
time, particularly in tracing institutional
change as the product of micro-level efforts
at enactment, interpretation, and compliance.
SUMMARY
We have argued that institutional research
can benefit from complementary attention to
the micro-order and the macro-level. We urge
more examination of the genesis of organiza-
tional practices and the resulting meanings
that are attached to these routines. Such
attention will not only provide a fuller
account of institutionalization processes, but
will also enable much clearer parsing of
endogenous and exogenous influences. Our
aim is to trace how efforts on the ground, so
to speak, may prompt macro-level changes
and responses. A multi-level view will offer
more purchase to the question of why institu-
tional practices and structures take the form
they do. Rather than focus only on the diffu-
sion or success of a form, we can better
explain the nature of what becomes regarded
as appropriate or venerable. The results of
such inquiry will lead to more compelling
and integrative analyses.
ACKNOWLEDGEMENTS
We are grateful to Marisa Bueno, Gili Drori,
Mary Ann Glynn, Royston Greenwood,
295
Tricia Martin, John Meyer, David Suarez and
Megan Tompkins for helpful comments on
an earlier draft. Research support for
Powell provided by the Center for
Social Innovation at the Stanford Graduate
School of Business, and for Colyvas by
the Columbia-Stanford Consortium on
Biomedical Innovation.
NOTES
1 See, for example, the review symposium on
Garfinkel’s Studies in Ethnomethodology in the
January 1968 American Sociological Review, notably
Coleman’s (1968) blistering critique, or Coser’s
(1974) presidential address where he used the bully
pulpit of the annual ASA meetings to argue that eth-
nomethodology was a method in search of a theory.
2 Garfinkel (1968) describes this accomplishment
aptly: ‘how jurors know what they are doing when
they do the work of jurors.’
3 We do not take up the fascination of the
actor network approach with artifacts and their poli-
tics. Simply stated, studies demonstrate that eco-
nomic technologies – trading screens, stock tickers,
calculators, etc. do not simply represent the market’s
ups and downs, but are very much involved in
shaping market behavior (Knorr-Cetina and
Bruegger, 2002; Buenza and Stark, 2004; Callon and
Muniesa, 2005).
4 In 1970, there was no financial trading in
‘futures,’ but by 2004, financial derivative contracts
totaling $273 trillion were outstanding worldwide.
5 Sensemaking’s insight lies in the ways it
‘captures the realities of agency, flow, equivocality,
transience, reaccomplishment, unfolding, and emer-
gence …, that are often obscured by the language of
variables, nouns, quantities, and structures’ (Weick,
Sutcliffe, and Obstfeld, 2005).
6 In contrast to ethnomethodology, where
Garfinkel’s (1967) clever studies of breaching trans-
form mundane encounters into unfamiliar controver-
sies, sensemaking studies tend to analyze how skillful
routines can result in terrible tragedy.
7 Charles Perrow often makes a very Weickian
remark, ‘how do I know what I think until I say it?’
8 See Sampat, 2006 and Rothaermel, Agung,
and Jiang, 2007 for excellent reviews of the debates
around university technology policies.
9 Pressures on nonprofits to become more ‘busi-
ness-like’ are certainly not new. Indeed, such urging
has been common throughout the sector’s history
(Hall, 2006). In the early twentieth century, religious
charities were criticized by progressive ‘scientific’
296 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
charity providers who urged the rationalization of
services for the poor (Lubove, 1965; Mohr and
Duquenne, 1997). In the 1970s and 1980s, leading
management consultancies persuaded many large
nonprofit organizations to develop strategic plans in
order to ‘enhance’ their operations (DiMaggio and
Powell, 1983; Mintzberg, 1994; McKenna, 2006).
10 The Center for Social Innovation at the
Stanford Graduate School of Business and National
Arts Strategies, a nonprofit consultancy for the arts,
jointly developed the case on Minnesota Public Radio
for classroom use. We have taught this case numer-
ous times in MBA classes and executive education
courses. James Phills and Ed Martenson were the pri-
mary contributors to the case’s development. We
draw on it for this extended example.
11 Interview with William Kling by Ed Martenson
of National Arts Strategies, 2004.
12 Interview with William Kling by Ed Martenson, ibid.
13 Ron Russell, ‘Public Radio’s Darth Vader
invades L.A. by gobbling up a sleepy Pasadena col-
lege station.’ New Times Los Angeles, June 29, 2000.
14 Interview with William Kling by Ed Martenson,
2004.
15 Interview with William Kling by Ed Martenson,
ibid.
16 The guidepoints to sensemaking are found in
‘institutional constraints, organizational premises,
plans, expectations, acceptable justifications, and
traditions inherited from predecessors’ (Weick et al.,
2005: 414). Furthermore, these guidepoints do not
have to be accurate. What matters is that they are
plausible from the point of view of enacted identities
and context (Weick, 1995: 55–56).
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Institutions and
Transnationalization
Marie–Laure Djelic and Sigrid Quack
INTRODUCTION
At a first level, the notions of ‘institutions’ and
‘globalization’ could appear to exclude or
oppose each other. The notion of institution
suggests stability or at least an attempt at stabi-
lization. An institutionalist perspective starts
from the basic recognition that human activi-
ties, including activities of an economic nature,
are embedded and framed within larger institu-
tional schemes that are, on the whole, quite
stable (Weber 1978; Polanyi 1944). A core
dimension of the institutionalist project has
been to understand how embeddedness mat-
ters, how institutions constrain and structure
action, create regularities and stability, limiting
at the same time the range of options and
opportunities. In contrast, the process of glob-
alization is often associated with the break-
down of traditional rules of the game and
institutions, in particular through the weaken-
ing of national states and their order-creating
capacities. The champions of that process wel-
come this evolution. They see globalization
as a process where ‘markets’ displace and
replace ‘institutions’ through time, bringing
along wealth and development, economic,
social, if not moral progress. The critics of
11
globalization, on the other hand, equate this
evolution with anomie, instability and disorder.
The withering of traditional polities and insti-
tutions is often described, from such a critical
stance, as one of the negative externalities of
globalization.
The objective of this chapter is to over-
come the apparent opposition between the
two notions of ‘institutions’ and ‘globaliza-
tion’. We suggest instead another perspec-
tive, where the two notions emerge as
being tightly intertwined. First, we want to
argue that our reading of the phenomenon
of globalization will be significantly
enhanced if we bring to bear upon that
phenomenon an institutionalist perspective.
The globalization of our world is, we
propose, deeply about institutions. It is about
the rules of the game in which economic
and social activity are embedded and about
the profound transformation of those rules
in a world where order-creating capacities
are not coinciding anymore with nation-state
power. We argue that much of this institution
building is of a transnational rather than a
global nature; it unfolds across blurring
boundaries between a variety of actors from
different nation-states without necessarily
300 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
implying convergence and homogenization
at the global level. Second, we also want
to argue that institutions and processes of
institutionalization cannot be understood
today without taking transnationalization
into account. Most spheres of economic
and social life, in most corners of the world,
are not only constrained and framed by local
and national sets of institutions but they
become enmeshed as well in transnational
dynamics.
We define institutions as those collective
frames and systems that provide stability and
meaning to social behaviour and social inter-
action and take on a rule-like status in social
thought and action (Meyer and Rowan 1977;
Douglas 1986: 46–48). Institutions stabilize
and survive through self-activating social
processes of reproduction (Jepperson 1991).
At the same time, we see institutions not only
as sets of constraints but also as tools and
resources enabling action (Clemens and
Cook 1999). In our view, institutions have
both a structural dimension, including formal
and informal rules and systems and an
ideational dimension, including normative
and cognitive schemes. The mix of those two
dimensions can vary. The reach of institu-
tions will also vary and it will be likely, in
fact, to co-vary with the scope of social
action and interaction. In other words, if
action and interaction only play out at the
level of a local tribe, locally defined and
enforced sets of rules will be both necessary
and sufficient. If action and interaction
expand beyond the boundaries of the tribe,
then there will probably be a need for
translocal institutional frames that may
displace, complement or transform local
ones. While institutional resilience can be
quite strong, institutions can change and
what this chapter does is explore some of the
dynamics of institutional change – those
more particularly associated with the process
of transnationalization.
We use the term ‘transnationalization’ to
describe a world – our world – where eco-
nomic and social organization and coordina-
tion increasingly reach across national borders.
The label ‘globalization’ is frequently
used to refer to the rapid expansion of opera-
tions and interactions across and beyond
national boundaries. However, we find it
unsatisfactory; ‘globalization’ has become
such a catchword that its meaning is highly
blurred. Transnationalization, we propose,
is a more suitable and focused concept to
make sense of the world we live in. We agree
with Hannerz (1996: 6) that ‘the term “transna-
tional” offers a more adequate label for phe-
nomena which can be of quite variable scale
and distribution, even when they do share the
characteristic of not being contained within the
state’. The term ‘transnational’ suggests entan-
glement and blurred boundaries to a degree
that the term ‘global’ could not. In our contem-
porary world, it becomes increasingly difficult
to separate what takes place within national
boundaries and what takes place across and
beyond nations. The neat opposition between
‘globalization’ and ‘nations’, often just
beneath the surface in a number of debates,
does not really make sense whether empiri-
cally or analytically. Organizations, activities
and individuals constantly span multiple
levels, rendering obsolete older lines of demar-
cation (Djelic and Sahlin-Andersson 2006). At
the same time, the term transnational does not
imply, as globalization often does, the disap-
pearance of states. It suggests instead that
states are now only one type of actor among
others and that they have to profoundly evolve
as a consequence (Katzenstein, Keohane and
Krasner 1998).
The term transnationalization is also a
term better adapted to our times than the term
‘internationalization’. Transnationalization
suggests more than the mere projection
of national states and national actors
outside their borders. It implies that
many connections go beyond state-
to-state and firm-to-firm interactions.
Transnationalization points to the progres-
sive structuring of spheres of action
and interaction with an emergent identity,
where debates cannot be reduced to
negotiations between national identities.
Transnationalization means, in other words,
 INSTITUTIONS AND TRANSNATIONALIZATION
that the world ‘in between’ nation-states is
not an anomic world with no order, power or
institutions apart from those projected by
strong states. In fact, the term suggests that
there is a need to consider transnationaliza-
tion from an institutional perspective – to
focus on those processes of institutionaliza-
tion and de-institutionalization associated
with the transnationalization of economic
and social activity.
We explore, in this chapter, the interplay
between institutions and transnation-
alization. We start with a review of the litera-
ture and get a sense of how different
perspectives have handled those notions
and sometimes their interaction. Then, build-
ing on recent developments within the
broad family of institutionalism, we propose
a reading of transnationalization through
an institutional lens. In other words, we
approach transnationalization as an institution-
alization process. Finally, here again building
on recent contributions, we bring the transna-
tional dimension into the study of institutions.
We do this in order to enhance our understand-
ing of contemporary processes of institutional-
ization and de-institutionalization and hence
to contribute to debates on institutional
change.
LITERATURE REVIEW
We take in turn four different theoretical
repertoires and explore what they have
to tell us, if anything, about the inter-
play between ‘institutions’ and ‘transnation-
alization’. Three of those repertoires
are inevitable when we talk about
institutions and institutionalization –
organizational institutionalism, societal
institutionalism and World System institu-
tionalism. We choose to bring in the fourth
repertoire – the International Relations
Literature – because it is important
for a discussion of transnationalization
even though it brings less to debates on insti-
tutionalization.
301
Organizational institutionalism
and its agnostic stance on
transnationalization
The field of ‘organizational institution-
alism’ encompasses a wide range of
conceptual and empirical studies, demon-
strating how organizations are shaped by,
adapt to and interact with institutionally
legitimized rules and templates in their
environment. In the tradition of classical
authors (Barnard 1938; Blau 1955;
Gouldner 1954; Parsons 1956; Selznick
1949; Weber 1978), organizations are
conceived as adaptive social systems embed-
ded in and responsive to wider societal and
institutional influences rather than just as
mere production systems geared towards effi-
ciency. In pursuit of the neo-institutionalist
turn introduced by Meyer and Rowan
(1977), DiMaggio and Powell (1983) and
Zucker (1977), recent work gives priority to
cognitive and cultural over regulative mecha-
nisms of institutionalization. The compre-
hensive concept of institutions used in
these analyses encompasses any kind of sus-
tained, reproduced social practice that may
be relevant to organizations, including
taken-for-granted practices, norms and
values.
Organizational institutionalism has mainly
focused on the study of institutionalization
processes in organizations or organizational
fields and has highlighted isomorphic pres-
sures, leading to homogenization of organi-
zational practices and forms. On the whole,
organizational institutionalism has taken a
rather agnostic stance on transnationaliza-
tion. Studies of organizational fields are
often limited to the local or industry level;
they rarely encompass a national or even
transnational dimension. Institutional
processes that extend beyond the boundaries
of organizational or sectoral fields or run
through vertically layered institutional orders
have been largely neglected. This agnostic
stance of organizational institutionalism on
transnationalization becomes increasingly
problematic as the horizons of action and
302 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
meaning of the actors become transnational
and global interdependencies increase.
This also applies to the recent revival of
interest in institutional entrepreneurship
and institutional change. Building on
DiMaggio’s (1988) seminal article, various
authors have investigated how institutionally
embedded actors engage in shaping and
changing their institutional frameworks.
Oliver (1991) identified various strategies
ranging from passive conformity to proactive
manipulation by which organizations act in a
given institutional environment. Greenwood,
Suddaby and Hinings (2002) investigated the
role of professional associations in the trans-
formation of institutional fields. The large
majority of these studies, though, focus once
more on institutional change at the local and
industry level (see, e.g., Dorado 2005;
Fligstein 1997; Greenwood and Suddaby
2006; Maguire, Hardy and Lawrence 2004).
Very few studies have analyzed institution
building at the global level (Maguire and
Hardy 2006).
Organizational institutionalism, though, is
of relevance to the theme of this chapter
because it provides key concepts that, when
further elaborated, can be fruitfully applied
to the study of institutionalization in the
transnational sphere. We suggest that this
applies particularly to process theories of
institutionalization and deinstitutionaliza-
tion, concepts of diffusion, translation and
editing, and organizational field analysis.
Organizational institutionalism offers a
micro–approach to institutional change that
can be extended to macro-levels of analysis.
Building on Berger and Luckmann (1967),
institutionalization has been defined by
Tolbert and Zucker (1996) as a three-phase
process. The first phase, called habitualiza-
tion, comprises the development of patterned
behaviours through recurrent and regular
interactions to which shared meanings
and understandings become attached. The
second phase, called objectification, is the
subsequent process of generalization of these
particular meanings and understandings
beyond the specific context in which they
crystallized. This occurs together with
the stabilization of a consensus on the
value of the behavioural patterns and of
their associated meanings and understand-
ings among social actors. This consensus
can translate into fragile preliminary struc-
tures and rules that can still be revised or
challenged at this semi-institutionalized
stage. The third and last stage of institution-
alization is one of ‘sedimentation’. It is char-
acterized by a wider spread of patterned
behaviours and meanings and by the solidifi-
cation and perpetuation of structures. During
this last stage, institutions can acquire the
quality of ‘exteriority’, i.e., they can become
taken for granted and develop a reality of
their own.
From a process perspective, de-institu-
tionalization is another important element of
any institutional change. Institution building
in the transnational sphere may equally
require a fair degree of de-institutionalization
of rules at local or national levels. Following
Oliver (1991, 1992), political, functional
and social pressures can lead to de-
institutionalization. Political pressures arise
from intentional interest-guided actions of
individuals who question the legitimacy of
existing institutions. Functional pressures
may lead to de-institutionalization when
stakeholders challenge the legitimacy of an
institution because of its growing incompati-
bility with technical and economic require-
ments. Social pressure can lead to
de-institutionalization when differentiation
and fragmentation of an organization’s mem-
bers and environment lead to an erosion of
institutionalized rules through a declining
normative consensus and cognitively shared
systems of meaning. Faced with such pres-
sures for institutional erosion, actors may
engage in various maintenance and repair
activities to stabilize institutions (Suchman
1995a; Lawrence, Chapter 6 and Lawrence
and Suddaby 2006).
In combination, institutionalization and
de-institutionalization provide powerful con-
cepts for the analysis of institutional dynam-
ics. These concepts have been revised and
 INSTITUTIONS AND TRANSNATIONALIZATION
refined by various authors (Barley and
Tolbert 1997; Seo and Creed 2002;
Greenwood and Hinings 1996; Greenwood
et al. 2002; Greenwood and Suddaby 2006;
Suchman 1995b). They are now able to
encompass pragmatic legitimacy based on
self-interest, moral legitimacy based on
normative approval as well as cognitive
legitimacy based on comprehensibility and
taken-for-grantedness (Suchman 1995a).
Lawrence et al. (2001) include power, disci-
pline and dominance as other sources of
institutionalization that may lead to a variety
of dynamics. The role of social movements
in de-stabilizing institutional fields and
transforming extant socio-economic prac-
tices has also been identified as important. It
has been, for example, at the centre of the
study by Lounsbury et al. (2003) on the rise
of a for-profit recycling industry in the
United States. Social movements also played
a key role in the emergence of international
standards like ISO (Walgenbach 2000).
The common point of these process
approaches is that they allow for contestation
between various interested actors in the first
two phases of the process and acknowledge
the co-existence of different degrees of insti-
tutionalization (Jepperson 1991; Dorado
2005). This makes them attractive concepts
for the analysis of institutional phenomena in
the transnational sphere where struggles
between different parties and a fair degree of
institutions in the making are to be expected.
So far, however, these processes have been
rarely studied in multinational organizations
or in multi-jurisdictional and multi–layered
institutional settings (see Suchman 1995b for
an exception) which are likely to be
characterized by parallel bottom-up and
top-down processes of institutionalization
and de-institutionalization.
Another contribution of organizational insti-
tutionalism is that if offers the tools to study
cross-border diffusion of practices, templates
and rules as sources of institutionalization
and de-institutionalization. Diffusion can
be based on structural relationships or on cul-
tural media and artifacts. While one stream of
303
organizational institutionalism has emphasized
isomorphism, this does not mean that diffusion
always leads to increasing similarity. The
results of diffusion processes are indeed quite
variable. Various reasons for this variability
and divergence have been proposed, e.g.,
transmission mistakes (Zucker 1977) and
socio-cultural differences. Westney (1987)
showed that imitation always involves an
element of innovation. Czarniawska and Sevón
(1996), Sahlin-Andersson (1996) and
Sahlin-Andersson and Engwall (2002) analyze
the way in which transfers of management
practices between different local contexts con-
sist of translation and editing activities
between different cultural and social contexts,
and show that these translations may lead to
rather divergent outcomes. In her analysis of
the transfer of the US model of economic
organization to Europe, Djelic (1998) high-
lights how geopolitical dependencies, transna-
tional elite networks and the strength and type
of resistance groups have led to different adap-
tations of the model in Germany, France and
Italy. The extension and refinement of diffu-
sion and transfer studies along these lines
promises substantial contributions to questions
about the degree to which increasing
cross-border and global exchanges will give
rise to homogenization, hybridization or con-
tinued variety of transnational institutional
rules.
Finally, the concept of organizational field
can be elaborated in ways that allow the inte-
gration of a transnational dimension into insti-
tutional analysis. In the original definition,
organizational field refers to ‘organizations
that in the aggregate constitute a recognized
area of institutional life’ (DiMaggio and
Powell 1991: 64f). While this concept usually
applied to the isomorphic diffusion
of organizational forms at a local or industry
level, more recently it has been used
to depict institutionalization processes that
unfold around regulatory ‘issues’ (Hoffman
1999) and ‘transnational governance’
(Djelic and Sahlin-Andersson 2006). Several
authors have called to give more attention
to the relative openness of fields (Greenwood
304 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and Hinings 1996), their nestedness into
wider institutional arrangements (Scott 2001)
and the unfolding of contradictory logics
within such fields (Seo and Creed 2002).
Studies on the emergence of new fields
point to the importance of social move-
ments (Lounsbury et al. 2003; Walgenbach
2000). Building on these treatments, Djelic
and Sahlin-Andersson (2006: 18f) suggest
that ‘transnational governance fields’ are
a pertinent unit of analysis to study
multi-level institutional dynamics that unfold
through various overlapping network relations
across blurring territorial and jurisdictional
boundaries and are driven by institutional
forces that constitute a transnational meaning
system.
Societal institutionalism and
the challenge of opening
national systems
The label ‘societal institutionalism’ refers to
what is now a dense set of conceptual and
empirical studies focusing on the historical
emergence and contemporary structuring of
national economies. Societal institutionalism
has related the structures and strategies of
firms, the relationships between different
stakeholder groups, the roles of managers,
the development and distribution of skills
between various layers of employees to the
distinct social and institutional settings in
which firms operate. The institutions receiv-
ing most attention in societal institutionalism
are the state, the financial, educational and
training systems, the labour market regime
and norms and values governing trust and
authority relationships (Maurice and Sorge
2000; Hall and Soskice 2001; Whitley 1999).
The main focus of societal institutionalism
has been the systemic nature of national con-
figurations of institutions. And a key preoc-
cupation of that literature has been to show
how those stable systems in turn shape and
define national economic organizations and
their self-reproduction. The picture has gen-
erally been one of multiple closed systems,
where each national ensemble – institutions
and organizations – functions in relative
isolation from the others. Such a description
of social and economic reality may hold as a
kind of ideal type for the past – and even
there with a varying degree of applicability in
different historical periods. Quack (2006a),
for example, argues that transnational
influences significantly shaped German
capitalism during its formative period. In the
contemporary period, the notion of relatively
closed business systems becomes even more
obsolete because of the growing transna-
tional interconnectedness of economic actors
across the world and the emergence and
strengthening of various forms of institution-
alized rule systems at the transnational level
(Brunsson and Jacobsson 2000; Djelic and
Quack 2003; Djelic and Sahlin-Andersson
2006; Drori, Meyer and Hwang 2006).
There have been a number of attempts to
date to adapt the analytical framework of
societal institutionalism in a way that can
help meet the theoretical challenges raised by
economic internationalization and transna-
tionalization (for an overview, see Deeg and
Jackson 2007). These attempts reflect essen-
tially three main strategies. One path has
been to call into question the conception of
institutions as fully determining economic
organization and action. The idea, instead, is
to highlight and look for the degrees of free-
dom that economic actors can enjoy within a
given institutional framework. The focus,
here, is on the existing and potential variety
of strategies and behavioural patterns within
a given society (Sorge 2000), on the multi-
plicity of institutional repertoires that
co-exist and linger on in the background of
any apparently dominant institutional frame
(Crouch 2005; Morgan and Quack 2005;
Schneiberg 2007), as well as on the tensions
that can arise from the conflicting interests of
different societal groups, leading to contra-
dictions within a particular societal system
and potentially to institutional change
(Almond and Rubery 2000; Quack, Morgan
and Whitley 2000). In his studies of the
German biotech sector, Casper has made
 INSTITUTIONS AND TRANSNATIONALIZATION
explicit this critique of societal institutional-
ism, suggesting that
‘static descriptions of existing institutional
environments must be combined with micro-level
accounts, tracing how firms, governments, and
other actors within the economy experiment with,
and at times re-configure, the institutional tool-kits
at their disposal’ (Casper 2000).
Such micro-level accounts can build upon
various theoretical approaches. Where Casper
(2000) turns to micro-economic theories to
bridge the gap between dynamic interactions at
the level of firms, regulators or policy makers
and pre-existing institutional frames, we sug-
gest that sociological approaches that highlight
the creative dimension of social behaviour
building on interactionism or ethno-methodol-
ogy are other possibilities (Douglas 1986;
Emirbayer and Mische 1998; Joas 1992).
A second route for adapting societal institu-
tionalism has been to explore what happens
when actors or organizations become involved
in multiple institutional environments with dif-
ferent and sometimes conflicting rule systems.
A particularly interesting laboratory here
appears to be the multinational company and
in recent years studies on its nature and devel-
opment have flourished (Harzing and Sorge
2005; Lane 2000; Morgan, Kristensen and
Whitley 2001; Morgan, Whitley and Moen
2005). The internationalization of companies
creates a ‘battle-field’ where different con-
stituencies enter in conflict and negotiate
(Kristensen and Zeitlin 2001; Sharpe 2001).
Transnational transfers of business practices
generally lead to hybridization of practices at
the organizational level but also of managerial
‘mental maps’ (Lane 2000; Smith and Elger
2000). In time, as Christel Lane (2001) argues
in the case of German pharmaceutical compa-
nies, this can trigger a transformation of
domestic institutions (see also Lane 2003;
Vitols 2005a, 2005b). Another important arena
for contestion between competing institutional
influences are global production networks
(Lane and Probert 2006). When change in
leading transnational companies reaches a crit-
ical mass, managers are encouraged or even
required to press for institutional reforms at the
305
national level. The adaptation of the theory
here leads us well beyond the notion of iso-
lated and self-contained national business
system. We need to reconcile the idea of differ-
ent systems with the reality of homogenizing
pressures – the outcome being in general
one form or another of hybridization or
creolization.
A third path, still barely explored, would
be to look at the transnational arena as an
institutionalised or institutionalising space.
Hollingsworth and Boyer (1997), for exam-
ple, argue that social systems of production
need increasingly to be seen as nested within
a complex system of regional, national but
also international arrangements. Whitley
(2003) argues that since 1945 the interna-
tional business environment has undergone a
transformation from a particularistic logic to
an increasing formalization and standardiza-
tion of the rules of the economic game.
So far, however, societal institutionalism has
contributed little to our understanding of the
processes leading to the emergence of new
institutional arrangements in the transna-
tional sphere. The few budding attempts,
recently, at exploring this frontier have built
in part upon different theoretical repertoires.
Authors like Brunsson and Jacobsson (2000),
Morgan (2001), Djelic and Bensedrine
(2001) or Plehwe with Vescovi (2003) look
at the actors, preconditions and mechanisms
involved in the emergence and transforma-
tion of institutions in the ‘transnational social
space’ (Morgan 2001). Djelic and Quack
(2007) argue that the concept of path-
dependency needs to be reconsidered in the
context of open systems. Their analysis
points to increasing co-evolutionary interac-
tion between national path transformation
and transnational path creation.
World system institutionalism,
globalization – and their limits
The label ‘world-system institutionalism’
refers to a now well-established tradition of
cultural institutionalism. In that tradition,
306 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
institutions are ‘wider cultural and symbolic
patterns’, increasingly with a ‘global’ or
transnational scope, that shape and to a large
extent determine organizations, structures or
actors and script behaviours and interactions
(Meyer and Rowan 1977; Scott, Meyer et al.
1994; Jepperson 2000a, b). Cultural processes
with a transnational scope explain to a signif-
icant extent changes in states, organizations
or individual behaviours (Meyer, Boli,
Thomas and Ramirez 1997).
World society is not only a society of
empowered actors; it is a society permeated
by and permeating actors with powerful cul-
tural values or institutional frames (Meyer
et al. 1997). These frames are shaped and dif-
fused as global models and blueprints along
which states (and other actors) are bench-
marked and possibly transformed (Finnemore
1993). There is no global state but the alterna-
tive to state power is not anarchy and chaos.
Meyer et al. (1997) convincingly argue that
the cultural and institutional web characteris-
tic of world society can be, at least in part,
a functional equivalent to a centralized,
state-like global power. The stateless but
rational, organized and universalist character
of world society may in fact add to rather than
detract from the speed of diffusion and the
global pervasiveness of standardized models
and blueprints (Finnemore and Sikkink 1998).
This line of research and its elaborate
theory of world society are enlightening.
They bring cultural perspectives and expla-
nations into the analysis of states, organiza-
tions and their transformation and provide
evidence that actorhood is of the ‘soft’ kind –
that is always itself embedded in cultural
frames – and in fact empowered by those cul-
tural frames. This line of research shows that
the real sources of power and authority in our
societies are cultural and diffuse rather than
structural and centralized. Studies within this
tradition show that states remain important
regulators, but that they are themselves
embedded in, shaped and fashioned by a
powerful world society and its associated
institutional and cultural templates (Meyer
et al. 1997; Jacobsson 2006). This research
has also contributed to our knowledge about
key carriers of global models and blueprints
(Boli and Thomas 1999; Finnemore 1996).
These studies, however, focus mostly on
how global cultural models and institutional
blueprints are diffused, potentially shaping
localized discourse and/or structures and
activities. We learn less on the construction
and negotiation of global cultural models
or institutions. We also lack an understanding
of actual processes and mechanisms of
diffusion and local reception – where
transnational institutional blueprints meet
with local institutional traditions. Finally,
there is room for more work – both empiri-
cally and conceptually – on carriers. There
is an extremely rich and diverse pool of
carriers out there that has only recently
started to be studied in and for itself
(Boli and Thomas 1999; Greenwood et al.
2002; Sahlin-Andersson and Engwall 2002;
Djelic and Quack 2003; Djelic and
Sahlin-Andersson 2006). Carriers are often
located at the interface of multiple sources of
embeddedness. In particular, they often cross
and overcome the national/transnational
border and contribute to back and forth trans-
lation and negotiation (Campbell 2004).
Studies combining an analysis of the activi-
ties and interests of carriers with an account
of their institutional embeddedness (with
sometimes multiple and conflicting sources
of embeddedness) should help us capture
power interplays and processes of interest
formation in highly institutionalized settings
with a transnational scope. They will also
allow us to understand how transnational cul-
tural models or institutions are negotiated,
constructed, diffused and adapted through
time – leading us well beyond the notion of
institutional convergence.
Learning about transnationalization
from the international relations
literature
The international relations literature is an
interesting tradition to explore when we
 INSTITUTIONS AND TRANSNATIONALIZATION
think about transnationalization and its
mechanisms. Traditionally, the perspective in
political science and in the international
relations literature has been of a highly state-
centreed internationalization process (Martin
2005). If anything, the structure of the
international sphere is given by and through
negotiations between states and essentially
reflects, at any given point in time, a
particular balance of power. For some time
now, though, a number of scholars within
the international relations community
have contributed to an evolution of those
state-centreed perspectives in interesting
directions.
A first line of reaction has been to point to
the progressive ‘retreat of the state’ in a glob-
alizing world (Strange 1996). Many contem-
porary regulatory reforms have been
associated with privatization and the partial
dismantling of public services and welfare
states (e.g., Vogel 1996; Djelic 2006). In the
process, states have in fact not withered
away. Granted they may be changing, poten-
tially quite significantly. As used by Majone
(1996) and others, the concept of ‘regulatory
states’ points to a significant evolution of
states and the way they control and influence
activities and actors. Regulatory states are
not less influential or powerful than more
interventionist states but they are increas-
ingly embedded in complex constellations of
actors and structures (e.g., Higgott, Underhill
and Bieler 2000; O’Brien, Goetz, Scholte
and Williams 2000). As such, their input and
identity is difficult to disentangle and sepa-
rate from the inputs and identities of other
actors involved.
Furthermore, it becomes less and less
acceptable to treat states as monoliths.
State institutions are complex patchworks
and this complexity becomes all the more
striking that the porosity of state institutions
has increased significantly, albeit differen-
tially. In fact, boundaries may now be tighter
and more rigid between sectors of state
administration than between particular state
agencies and other actors in the same sector
or field.
307
Along with the idea of a retreat and
transformation of states, there has been
a focus on the widespread expansion of
various forms of private authority (Cutler,
Haufler and Porter 1999; Hall and Biersteker
2002). There is an interesting parallel
with pre-modern (i.e., pre-nation-states)
times when private authority spanning local
communities was widespread; the lex merca-
toria (or merchant law) being a striking
example (Berman and Kaufman 1978;
Lehmkuhl 2003). The modern concept of pri-
vate authority is wide and encompassing,
referring to a multiplicity of rule-making and
institution-building activities that emerge and
are structured outside states.
Some contributions within the inter-
national relations literature pointed already
in the 1980s to the importance here of
transnational social networks. Using the con-
cept of ‘social networks’ in its descriptive
and first-level sense, Kees van der Pijl and
the Amsterdam school explored the sociol-
ogy and political economy of transnational
class formation (Van der Pijl 1984, 1998).
They unearthed in the process important
mechanisms of transnational governance that
reproduced the class power of particular
groups and associated structures of domi-
nance – both reaching progressively a
transnational scale and scope.
Haas (1989, 1992) also pointed to the
importance of social networks as key mecha-
nisms of governance crossing over state
boundaries. Haas’ concept of ‘epistemic com-
munities’ makes reference to communities of
expertise and practice that are increasingly
transnational while individuals in those com-
munities retain some form of local or national
influence and authority (Haas 1992). This mix
can allow those groups to be powerful mecha-
nisms at the interface between transnational
and national institutional spheres. The under-
standing of ‘social networks’ here is a sophis-
ticated one. Epistemic communities are
‘faceless’ and members generally have direct
interactions only with small subsets of the
community. Those communities are neverthe-
less powerfully connected. More than through
308 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
direct and regular contacts, the ‘glue’ is gener-
ated by common cognitive and value schemes,
often associated with complex socialization
processes and generally translated into
‘expertise’, shared interests and projects. It is
interesting here to draw a parallel between this
concept and the idea of ‘carriers’ as emerging
in ‘world–system institutionalism’.
More recent contributions talk about regula-
tory networks, underscoring the wide variety
of public and private actors involved in rule
making, institution building and monitoring.
As Schmidt puts it, ‘though the hangover of
the traditional focus on the state’s legal com-
mands has been felt in the study of regulation,
both European and American scholars of
policy networks have advanced perspectives
on regulation rooted more firmly in institu-
tional dynamics and political behaviour’
(Schmidt 2004: 276). The idea of regulatory
networks points to complex interconnections
between a multiplicity of individual and orga-
nizational actors – interconnections that can be
direct or mediated. The idea also suggests
organizational, cognitive and normative frames
or arenas in which those interactions take place
and are structured. Finally, with a focus on reg-
ulatory networks comes a question about their
legitimacy and more generally about the legit-
imacy of private authority. With a broadening
set of rule-makers and institution-builders, the
way of authorizing rules and institutional
frames is likely to broaden as well. Coercive
rules that rest on the monopoly of states over
legal authority and physical violence or
on citizens’ habitual obedience come to
represent only one among several forms of
authorization.
Building upon the richness of insights
emerging from a confrontation of the differ-
ent repertoires presented above, we sketch
out below a theoretical frame that allows us
to read the contemporary interaction between
institutions and transnationalization. This
frame has two main dimensions – first, we
reinterpret transnationalization as institu-
tional recombination and, secondly, we con-
sider the impact of transnationalization on
processes of institutionalization.
TRANSNATIONALIZATION AS
INSTITUTIONAL RECOMBINATION
A core insight of institutional theory is that the
patterning of social life is not produced solely
by the aggregation of individual and organiza-
tional behaviours but also by institutions that
structure and shape the interests, strategies and
behaviours of social actors. Authors like Ann
Swidler (1986) or Mary Douglas (1986), how-
ever, draw our attention to the fact that this
institutional patterning is not fully determinis-
tic. Institutions (or culture in the terminology
of Swidler) provide ‘tool kits’ or repertoires
from which actors can to some extent choose
in order to construct their ‘strategies of action’.
The resulting variety in social behaviours gen-
erates a pool of alternative mental maps and
patterns of behaviour, which, under specific
conditions, can come to interact with each
other and challenge existing institutions.
Where do transnational institutions
come from?
In processes of institutional emergence,
decline or change, new configurations are
rarely created from scratch. Rather, the genesis
of institutions in contemporary societies
unfolds in general in a form that is closer to
‘bricolage’ than to ex-nihilo generation
(Offe 1995; Hall and Taylor 1996; Campbell
1997; March and Olsen 1998). Actors build
upon, work around, recombine, reinvent and
reinterpret logics and institutional arrange-
ments that function elsewhere and with which
they are familiar. Within the context of
nation–states, the creation of new institutions
is likely to be strongly influenced by the state,
in the form of political actors or agencies
(Clemens and Cook 1999). But even there, this
should not blind us to the impact and signifi-
cance of other actors.
The relevance of the idea of ‘bricolage’
(Douglas 1986) becomes only more signifi-
cant when we look at processes of institu-
tional emergence and institution building
 INSTITUTIONS AND TRANSNATIONALIZATION
at the transnational level. We suggest, in fact,
that turning our attention to the transnational
level should go hand in hand with a refocus-
ing away from the idea of institutional
configurations to that of dynamic institutional
recombination. Moving from institutions to
institutionalization and thinking about the
latter as a set of sequential stages – habituali-
zation, objectification and sedimentation
(Tolbert and Zucker 1996) – suggests that the
level of embeddedness and robustness of insti-
tutional rules will vary. Thinking about institu-
tionalization as a process also implies to think
in parallel about processes of de–institutional-
ization (Oliver 1992). It opens the door, as
well, to the possibility of social intervention
and hence agency. Institutions are not only
constraining; they are also enabling.
Institutions are not static systems; they are
malleable processes.
Institution building in the transnational
sphere involves multiple actors or groups
of actors with mental and action maps
originating from quite different institutional
contexts. Very often those originating con-
texts have a societal or national character
(Morgan 2001). Hence, the process of insti-
tution building at the transnational level
cannot be conceived in total isolation
and abstraction from national institutional
contexts. Multiple national actors extend
their national contextual rationalities into
the international sphere where they interact,
confront and negotiate with each other.
Those participants may become involved in
institution building in a newly emerging
transnational sphere (McNichol and
Bensedrine 2003; Engels 2006). Or they may
be playing a part in reforming, renegotiating
and transforming existing transnational
institutional arrangements as motivations,
power relations and conditions change
over time (Lehmkuhl 2003; Botzem and
Quack 2006). Through time, repeated
interactions and the building up of a transna-
tional frame, a number of actors may be
emerging that have a transnational – in the
sense of not purely national – identity or
sense of self.
309
Historical scenarios – transnational
organizations or regional
federations
Historically, a first and obvious scenario
for institution building in the transnational
arena has been the formal setting up of a
transnational organization. This, naturally, is
an old scenario and, with a little bit of a
stretch, the Roman Catholic Church could be
used as an illustration, and a successful one
at that. Without going that far back into his-
tory, a number of other examples come to
mind. The League of Nations was an impor-
tant ancestor, although with little impact ulti-
mately (Murray 1987; Knock 1995). In the
years following 1945, the project of structur-
ing the transnational space around transna-
tional organizations regained strength after
nearly two decades of strong nationalism and
protectionism. The United Nations and its
various divisions, the Organization for
European Economic Cooperation (OEEC,
later to become the OECD), the International
Labour Office (ILO), the International
Monetary Fund (IMF) or the World Bank and
the General Agreement on Tariffs and Trade
(GATT, later to become the World Trade
Organization) all proceeded from the same
logic.
These organizations all had a centralized
core, in charge of setting the rules and build-
ing institutions at the transnational level. And
this centralized core directly reflected the
interests of national member states – as con-
veyed by public or semi-public types of
actors such as representatives of particular
national governments and polities. In that
context, such transnational organizations
were in fact little more than the tools of par-
ticular nation-states and governments, mir-
roring at any point in time the existing
geopolitical balance of power. In time, how-
ever, the technocratic elite in charge of every-
day monitoring and management could
evolve its own identity that could then not be
fully reduced to any single national logic.
These types of transnational organizations
have been more or less successful in their
310 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
attempt at setting the rules of the game on a
transnational scale. The more successful –
the IMF, the World Bank and probably also
the GATT or later the WTO – have been
those with some control over compliance and
with sufficient means to monitor that the
rules they are building are indeed being
implemented. Control could stem from a
degree of dependence of member states on
transnational organizations as well as from
the capacity these organizations may have to
associate rewards with compliance and sanc-
tions with non-compliance.
A second scenario for institution building
in the transnational space follows from the
temptation to create a supranational market,
or even a supranational state or nation.
With a little bit of a stretch, once again,
and some degree of historical anachronism,
since a number of them were constituted
before the emergence of the nation–state,
empires are the materialization of such a
temptation. In our modern age, the most
obvious illustrations of this second scenario
are constructions such as the European
Coal and Steel Community (ECSC), the
European Economic Community (EEC) or
the European Union (EU). There are signs
that NAFTA may also be travelling that road.
Here again, the process of rule setting and
institution building stems from a political,
top-down kind of initiative. Public or
semi-public actors, governments or their rep-
resentatives are instrumental in that process
even though they may not always be as pre-
dominant as in the first scenario. The scope
and reach of those centrally engineered con-
structions goes well beyond, in general, the
scope and reach of transnational organiza-
tions. The new rules and institutions are
enforceable, in the sense of their being
formally and efficiently associated with
enforcement mechanisms that put member
states under strong pressure to comply. In
fact, the reality and strength of enforcement
mechanisms, combined with the scope of the
domain controlled, might be the key differen-
tiating features between this type of suprana-
tional constructions on the one hand and
transnational organizations on the other.
A supranational construction such as the
European Union is indeed characterized by
the strength of enforcement mechanisms and
thus by its potential clout and impact over
member nations and states. One type of
enforcement mechanisms are direct controls
associated positively with rewards and nega-
tively with sanctions. Another type of
enforcement mechanism is the reliance on
voluntary compliance, where member states
are aware of the overall benefits they draw
from belonging to the supranational con-
struction and, conversely, realize the danger-
ous consequences of not respecting the terms
of a contract they entered of their own will.
Self–regulating communities:
scenario of the future?
There is, we propose, a third scenario for
institution building in the transnational
space to which we associate the label
‘self-regulating transnational communities’.
This scenario has become progressively
more widespread in recent years. In this
third scenario, all actors concerned by a par-
ticular type of transnational activity come
together, often in non-structured and rather
unformalized settings, elaborate and agree
upon collective rules of the game (Cutler
et al. 1999; Morgan and Engwall 1999).
In contrast to the first two scenarios, public
or semi-public actors might be involved in
rule setting but they are not the only ones.
In fact, private actors might take the initiative
and be quite instrumental for the elaboration
of rules and the building of institutions
as well as for monitoring compliance
(McNichol and Bensedrine 2003; Botzem
and Quack 2006).
Another difference with the two previous
scenarios is that the logic at work is not
external control but rather self-discipline
or self-regulation. Instead of waiting for
public actors to impose an institutional frame
and thus orient private action, the actors
concerned and in particular nongovernmental
 INSTITUTIONS AND TRANSNATIONALIZATION
and private actors, take the initiative and
set their own rules. Within an arena or a field
of transnational activity lacking initially
in structuration, all concerned actors collabo-
rate in building institutional arrange-
ments that will constrain their own actions,
behaviours and interactions. The process is
one of voluntary and relatively informal
negotiation; the emerging structural arrange-
ments are relatively amorphous, fluid and
multifocal in nature.
Self-disciplining transnational communi-
ties of that sort tend to rely on two main cat-
egories of enforcement mechanisms. One is
voluntary compliance; compliance this time
not only of national states and governments
but directly of all actors involved in the
process. Compliance is voluntary for the
main reason that these actors define the rules
themselves and inflict upon themselves the
institutional constraints that will bound their
actions and interactions. A second enforce-
ment mechanism, socialization, can be iden-
tified – although probably more as a potential
and an objective than as an already existing
and concrete reality. Indeed, socialization
can only emerge as an enforcement mecha-
nism at a later stage. Rules and institutions
have to be constructed and agreed upon (the
habitualization or pre-institutionalization
stage identified above), actors have to func-
tion within that frame for a while (objectifi-
cation), before the double process of
socialization and self-reproduction through
socialization can really become operative
(sedimentation). The advantage of socializa-
tion as an enforcement mechanism is
the decreasing need for direct controls
and thus for both external rewards and sanc-
tions. Actors socialized through a particular
institutional frame or within a particular
set of rules become their own watchdogs.
Ultimately, this institutional frame will have
a tendency to become neutral and transparent
for those actors who function within the
space it structures.
This third scenario for institution building
at a transnational level is not new. As argued
by Lehmkuhl (2003), for example, the
311
structuring of commercial arbitration at the
transnational level by actors themselves –
and in particular by private actors – has
existed for a long time. One could also
argue that international cartels, particularly
during the interwar period or even after
in some industries (Cutler et al. 1999;
Glimstedt 2001; Lilja and Moen 2003), fit
within this type of scenario. While that sce-
nario is not new, it has recently been going
through a period of ‘revival’ after long
decades when national states had all but
established a monopoly over the handling of
transnational issues and spaces. Many non-
governmental organizations have been
established that engage in standard setting,
accreditation and other forms of soft regula-
tion. Large multinational firms, particularly
in professional services, have become
rule-setters and rule-developers of their own
(Quack 2006b; Morgan 2006). Informal reg-
ulatory networks such as the International
Competition Network (Djelic and Kleiner
2006) are increasingly exerting influence on
national regulators. We propose, in fact, that
there has been an historical evolution
overall, since 1945, in terms of which
scenario has been predominant. The early
period, in the years following the war, was
characterized by the multiplication of
transnational organizations. Then came
supranational constructions, particularly in
Western Europe. This naturally, is still
going on. At the same time, empirical
evidence points for the recent period
increasingly in the direction of a greater role
and place for self-disciplining transnational
communities (Braithwaite and Drahos 2000;
Brunsson and Jacobsson 2000; Djelic
and Quack 2003; Djelic and Sahlin-
Andersson 2006).
Transnational recombination: mode
and nature of the process
In each of these three different scenarii,
transnational institution building can be
analyzed as a process of reinterpretation,
312 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
recombination and bricolage from institu-
tional fragments with different contextual
origins. We suggest that there are three
different modes in which the rubbing, contes-
tation and recombination of different institu-
tional fragments can take place at the
transnational level.
A first, obvious, mode we label here ‘dom-
inant’. In that mode, the building of institu-
tions at a transnational level simply reflects
one dominant local or national model. Rules
and institutions originating from one particu-
lar national space thus shape in a rather direct
way the transnational space. In a second
stage, this local turned transnational model is
bound to have an impact on a number of
other national institutional configurations, as
we will argue below. This overall process
generally reflects the objective and/or per-
ceived strength of the ‘dominant’ nation,
which itself depends upon a combination of
economic, military and geopolitical factors,
with some degree of ideological propping up.
Undeniably, since 1945, this role of ‘domi-
nant’ nation has been played by the United
States and this particular mode of recombina-
tion can be referred to as a process of
Americanization (Djelic 1998; Whitley
2003; Djelic and Quack 2003; Djelic and
Sahlin-Andersson 2006).
A second mode emerges that we label
the ‘negotiated mode’. Institution building in
the transnational space can come about
through the confrontation or ‘rubbing against
each other’ of multiple locals or nationals,
leading to what can be described as a process
of negotiation. This dimension of negotiation
is documented in a number of recent
empirical contributions (e.g., McNichol and
Bensedrine 2003; Ventresca, Szyliowicz and
Dacin 2003; Botzem and Quack 2006).
At the same time, if we look at them more
closely, empirical situations often illustrate
in fact the interplay between the ‘negotiated’
and the ‘dominant’ mode. All participants to
the negotiations are not created equal and
some of them may loom significantly larger
than the others in the process. This under-
scores the ideal typical nature of the different
modes we identify and the likelihood that
they will co-exist and interact in real-life
contexts. In fact, while situations of negotia-
tion are rarely perfectly balanced, a situation
of dominance is on the other hand rarely so
extreme as to leave no space for at least par-
tial negotiation. In the context of what was
described above as ‘Americanization’, for
example, what many empirical studies show
is the concomitant partial alteration, transla-
tion and negotiation of the ‘dominant’ model
when it comes into contact with previously
existing and established national institutional
configurations (Djelic 1998; Zeitlin and
Herrigel 2000; Amdam, Petter, Kvalshaugen
and Larsen 2003).
Common to illustrations of both the
‘dominant’ and ‘negotiated’ modes is the fact
that the actors involved – whoever and what-
ever they are – remain strongly embedded in
and shaped by the institutional contexts of
their home countries. These actors tend in fact
to extend the actions and strategies used in
that context and shaped by it to the transna-
tional arena. This, however, is not necessarily
always the case. The involvement of actors in
processes of transnational institution building
can – particularly if sustained and recurring
over longer periods of time – lead to a blurring
of identities, particularly national ones
(Morgan 2001). Once transnational arenas
have been structured for a little while, once
transnational institutions and rules of the
game shape behaviours and interactions, some
of the actors concerned come to be more
directly affected by these transnational institu-
tions than by the institutions of the country
they may originate from. New actors may also
sprout up and the only referent for these new
actors will be the embryonic transnational
institutional context in which they were born
(e.g., some transnational nongovernmental
organizations [NGOs], lobbying organizations
created at the European level, see Salk,
Nielsen and Marks 2001).
Any further process of transnational institu-
tion building in that context cannot anymore fit
under the categories of either the ‘dominant’
or the ‘negotiated’ mode. What takes place
 INSTITUTIONS AND TRANSNATIONALIZATION
then is what we label, for lack of a better word,
an ‘emergent’ process. Multiple actors with no
clear identities and functioning themselves at
the interface of multiple rule systems, come in
collision with each other. If we are to follow
the metaphorical use of chaos theory in social
sciences, the result in this case is bound to be
unpredictable (Thietart and Forgues 1995). We
call this result an ‘emergent’ construction.
The three modes identified here are clearly
ideal types. There is bound to be, in other
words, interaction and interplay between
them in real life situations. At the same time,
we suggest that there has been a shift over
time in their relative importance as a mode
of transnational institution building or
recombination. This shift parallels to quite a
degree the evolution, in terms of scenario,
that was identified above. In the immediate
post-World War II years, we have argued, the
main scenario for transnational institution
building was the setting up of transnational
organizations. During this period, the domi-
nant mode – one national model, the
American one, imposing itself on a transna-
tional scale – was all but overwhelming. The
dominant mode has not entirely disappeared
with the attempts at supranational construc-
tion. But such projects, by their very nature,
meant and required some degree of negotia-
tion between the several member nations that
were shaping them, generally on a world
regional basis. Finally, the move towards the
third scenario – transnational institution
building by self-disciplining transnational
communities – coincides quite closely with
the slow assertion of an emergent mode. It
seems furthermore to fit particularly the case
of transnational institution building across
world regions – in what gets close to being a
‘global’ space.
TRANSNATIONALIZATION AND ITS
IMPACT ON INSTITUTIONS
Ongoing processes of institutional recombi-
nation at the transnational level, as described
313
in the previous section, have a high potential
to challenge and undermine institutional sta-
bility and identical reproduction at the
national level. Transnational institutional
frames in the making are likely to challenge,
to confront and to change – even though
slowly and incrementally – national institu-
tional systems. They can do so through direct
impact – what we call here ‘trickle-down’
effects or mechanisms. When transnational
organizations or supranational constructions
(e.g. the WTO, the IMF, NGOs, multina-
tional firms or the European Union) exert
pressure directly at the national level on
member governments to redefine national
rules of the game, then we have what we call
‘trickle-down’ effects or mechanisms.
The impact can also be more indirect.
Through cross-national interactions at sub-
societal or meso-levels – sectors, industries,
professions or even from region to region –
actors are being drawn into social spaces that
extend well beyond their national context of
origin. In that process, those actors are likely
to be confronted with and to have to function
within sets of rules that may be quite differ-
ent from those of their country of origin.
Subsocietal actors become the vectors and
transmission belts through which those new
rules are brought into a given national space.
In certain circumstances, those subsocietal
actors may be more than mere messengers.
They may become real mediators and con-
tribute to pushing those new rules up towards
the national institutional level, fostering in
the process a transformation of the national
business system or of the national business
rationality. This path or pattern we associate
with ‘trickle-up’ effects or mechanisms.
Trickle-down trajectories
The challenge, naturally, may come from
transnational organizations or supranational
constructions. Those organizations and con-
structions quite often turn out to be
rule-making bodies and some of them have
gained significant and direct influence over
314 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
national polities. This is clearly the case with
the European Union. In recent years, the
impact of the European Union has been the
object of an increasing number of studies
(Leibfried and Pierson 1995; Fligstein and
Mara-Drita 1996; Sandholtz and Stone
Sweet 1998; Plehwe 2001). With respect to
the economic realm, other transnational
organizations such as the International
Monetary Fund (IMF), the World Bank, the
European Bank for Reconstruction and
Development (EBRD) or the World Trade
Organization (WTO) should be mentioned.
These organizations contribute to the diffu-
sion of particular rules of the game, which
are likely to collide with incumbent rules or
practices in any given national space.
Less attention has been paid to the sce-
nario where challenger rules emerge from a
transnational space lacking formal structure
and being, as a consequence, less visible.
What we have said above about self-
disciplining transnational communities indi-
cates that rule setting and rule making can
also take place in transnational fields or
arenas lacking structuration in relative terms.
Actors – all kinds of actors, from private
firms to consumers, lobbies, nongovernmen-
tal organizations (NGOs) or state representa-
tives – come together to negotiate and agree
on rules of the game. Examples can be found
in the regulation of financial markets
(Morgan 2001; Ventresca et al. 2003),
accounting standards (Botzem and Quack
2006), international commercial arbitration
(Dezalay and Garth 1996; Lehmkuhl 2003),
or competitive conditions (Djelic and Kleiner
2006). Those rules of the game are institu-
tions, to the extent that they structure action
and economic activity. For the most part,
those are cognitive and normative institutions
(Meyer and Rowan 1977). The rules that
emerge or are negotiated in that context are
essentially norms that are enacted, appropri-
ated and enforced by the actors themselves
(Brunsson and Jacobsson 2000). The struc-
tural apparatus – formal organization, legis-
lation or coercive machinery – comes if at all
in support of those norms.
Once transnational institutions or rules
are there or in the making, the question
moves to the conditions in which they
may come indeed to trickle down to the
national level, with a potentially significant
impact upon incumbent national institutions.
One important variable appears to be the
degree of centrality of a particular country,
through its private and public representatives,
in the process of construction and stabiliza-
tion of transnational rules. It seems fair to
differentiate between at least three main
groups of countries in that respect.
The first group is a little peculiar; it is a
one-unit sample. The United States plays
quite a unique role even though it does not
always manage to impose the solution that
will best serve its interests. An explanation to
that special place and role lies in the unique
position of geopolitical dominance that has
characterized the US since 1945 (Djelic
1998; Braithwaite and Drahos 2000).
Through its private and public representa-
tives, that country has often been guiding and
structuring the process of construction and
stabilization of transnational rules in a more
or less direct and visible manner, at least
since 1945. A second group is made up of a
few core (and rather rich) countries, which
are proactive and quite involved in trying to
shape the process. The third group finally is
the larger one and brings together those
countries with a more passive connection to
the process.
Empirical evidence seems to show that
compliance may be more regular, once the
rules have been agreed upon, within the
second group of countries, rich core coun-
tries. In the third group of countries, those
that are more passive in the process of
transnational institution building, appropria-
tion seems to be more of an issue. The
process is likely to be slower with a greater
distance between the world of discourse and
formal institutions and the world of action
and practice that will remain very much
structured by traditional patterns (Meyer
et al. 1997a; Meyer et al. 1997b). In the case
of the United States, compliance appears, on
 INSTITUTIONS AND TRANSNATIONALIZATION
the other hand, quite irregular and changing
(McNichol and Bensedrine 2003; ENS 2001;
Libération 2002). The profound geopolitical
imbalance in favour of the US increases the
degrees of freedom of that country regarding
compliance with transnational rules, even
when it has played a significant role in the
process of construction and elaboration of
those rules.
Other variables with an impact on
trickle-down trajectories are the nature of
incumbent rules and the degree of depend-
ence of a particular country on external
players. We hypothesize that a country where
local rules are weak, either because they lack
legitimacy, have proven inefficient or a
hindrance, are altogether absent or still
at a pre-institutionalization stage, creates
more space for rules constructed at a transna-
tional level to trickle down. This can only
be reinforced in situations of dependence,
where a country, for example, sees the
granting of financial assistance it badly
needs being conditioned upon compliance to
a set of transnationally defined rules (Djelic
1998). This is not, after reflection, in
contradiction with our precedent finding.
Weak countries tend to belong to the group
we have defined above as ‘passive’.
Weakness and dependence may compensate
in part for passivity, which might lead to
more rapid formal compliance than expected.
Quite often, however, a significant gap will
remain between the world of discourse and
formal institutions on the one hand and the
world of practice on the other (this finds con-
firmation in earlier work by sociologists of
global society, e.g., Meyer et al. 1997a; Boli
and Thomas 1999; Meyer and Ramirez
2000). The former might indeed be affected
through a trickle-down trajectory by transna-
tional challenger rules. The latter will tend to
stay, at least for a while, embedded in local
traditions and national institutional legacies.
A special and quite different case of depend-
ence should be added and mentioned here.
Direct political dependence of national coun-
tries on a supranational construction, such as
is the case in the European Union context, is
315
an obvious path for trickle-down mecha-
nisms. This situation naturally creates
conditions where the rules defined at the
supranational level are likely indeed to have
a rapid and significant impact at the national
level.
Trickle-up trajectories
Threats and challenges to national institu-
tional systems may also come from below,
from subsocietal or subnational levels.
Such ‘trickle-up’ trajectories can be of two
kinds. First, national actors crossing national
borders may find that the rules of the
game with which they are familiar come
into collision and sometimes even are in
contradiction with rules of the game
dominant elsewhere. Those national actors
could be individuals, groups of individuals,
firms, associations or networks of firms.
This type of scenario will be all the more
widespread now that the internationalization
of economic activities and of exchanges in
general is becoming increasingly dense and
intense.
The opening up of national economies
may stimulate a second scenario that is
parallel but goes in the other direction.
Foreign actors move into a given national
space with rules of the game that are quite
different from those of local actors. A variant
of that scenario is when the champions of
challenger rules on the local or national
scene are themselves locals or nationals who
are pushing for new rules of the game in
order to carve a space for themselves. What
this is all about is the attempt by new or
emerging actors, whether local outsiders or
foreign entrants or even a combination of
both, to redefine rules of the game in an
industry or impose ‘new’ ones in order to
enter the field and the game and to reshape it
to their advantage (Djelic and Ainamo 1999;
Lane 2001; Kleiner 2003).
Various empirical studies show how
this encounter between incumbent and chal-
lenger rules plays out at subsocietal levels,
316 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
whether at the level of the firm (Lane 2000;
Tainio, Huolman and Pulkkinen 2001),
at the level of an industry (Lilja and
Moen 2003), an organizational field (Kleiner
2003) or at the level of a profession (Quack
2006b; Quack 2007; McKenna, Djelic
and Ainamo 2003). This interplay at the
subsocietal level is not neutral for national
institutions. Rules of the game may change
at the subsocietal level well before this is
institutionalized at the national level. But
transformations at the subsocietal level
may also reverberate in time at the national
institutional level. The decision by the
German government in 2001 to create a
Kodex-Kommission in charge of ‘mod-
ernising the rules and practices of German
capitalism’ is a clear case of such a process
of post hoc ‘regularisation’ (Le Monde, 7
November 2001). The object of this commis-
sion was to take stock of changes that had
already redefined the German economic
game and to institutionalize them at the
national level. This raises questions about
the conditions in which contestation and
transformation of incumbent rules of the
game at the subsocietal level are likely
indeed to reflect and impact at the national
level.
One such condition seems to be the central
position and overall leverage of the subsoci-
etal actors concerned by or involved in the
collision of rules. Changes within core and
strategic firms or industries are more likely,
ultimately, to have some impact on national
level institutions. This appears to be particu-
larly true in smaller countries, as shown by
the cases of Nokia in Finland (Tainio et al.
2001) or of the forest industry in Norway and
Finland (Lilja and Moen 2003). In smaller
countries, core firms or industries have pro-
portionally more clout, strategic importance
but also leverage, which could explain their
more direct impact.
Other important conditions are the
strength and legitimacy of those outsiders
championing and pushing for challenger
rules. In that respect, Anglo-Saxon players
benefit from something akin to a ‘trademark’
advantage in professional fields such as cor-
porate law or management consulting as well
as in other activities related to banking or
financing. This allows them to be more
forceful and convincing in the promotion of
their own sets of rules of the game. Naturally,
the strength and legitimacy of those out-
siders and challengers will be more or less
filtered and mitigated by the existence and
embeddedness of local incumbent rules.
Local appropriation will likely be more
complex and contested in situations where
incumbent rules already exist and are deeply
embedded – when, in other words, local
institutional rules have already entered the
phase of sedimentation.
Another condition seems important that
is not unrelated to those identified above.
The greater the shock or the more intense
the collision, the more likely it will reverber-
ate at the national level. The collision
will be more intense if subsocietal actors –
firms, industries, professions or even possi-
bly regions – lack protective buffers or else
are in a situation of perceived and self-
acknowledged crisis. The lack of protection
can be due to the immaturity of the local
field. It can be strategically engineered,
either by political authorities or by the actors
themselves, through deregulation for exam-
ple or a lowering of trade or other protective
barriers (Djelic and Ainamo 1999). It will
also be related, naturally, to the strength of
the push coming from outsiders and challenger
rules. A perceived and self-acknowledged
situation of crisis will tend to correspond, on
the other hand, to a high degree of dissatis-
faction with incumbent rules, either because
these rules do not seem to co-evolve
with environmental conditions and/or
because they narrow the opportunities of
local and incumbent actors in a changing
world.
We argue that under these conditions – or
a subset thereof – transformations in rules of
the game that were initially happening at
a subsocietal level are likely to have an
impact and reverberate, after a while, at the
national level.
 INSTITUTIONS AND TRANSNATIONALIZATION
CONCLUSION
In this chapter we have explored the interac-
tions between institutions and transnational-
ization. An important layer of institutions
with transnational scope has emerged since
World War II and plays an increasing role
in the governance of economic relations.
We need new categories and analytical tools
to accurately characterize these institutions
and their impact on institutional change at
the societal level. Comparing, contrasting
and building upon four existing theoretical
approaches, we move towards a theoretical
model that accounts for interactions between
institutions and transnationalization. This
model consists of two related and comple-
mentary arguments.
Firstly, transnational institution building
can be defined as a process of institutional
recombination that involves elements of
different national and local institutional
arrangements. We have identified different
scenarios and modes of institutional recom-
bination at the transnational level out of
which self-disciplining transnational com-
munities with emergent modes of institu-
tion building seem to have become more
widespread in recent years. Secondly,
processes of institutional recombination have
a high potential to challenge and under-
mine institutional stability at the national
level through trickle-down and trickle-up
effects. Trickle-down processes can directly
influence governments to redefine legal
rules of the game at the national level.
Trickle-up effects may infiltrate societal rule
systems from the bottom-up through
cross-border interactions between economic
actors, social movements and other stake-
holders at the organizational field, industry
or sectoral levels. Encounters between chal-
lenger and incumbent rules may lead to new
forms of institutional recombination at these
levels. They are likely to impact on national
rules systems if there is a central and strong
position of the transformed institutional field
with respect to the overall society, a high
legitimacy of outside challenger rules and/or
317
a lack of protection of incumbent rules
because of the immaturity of or a crisis in the
field.
Our findings suggest that economic and
social behaviours are increasingly shaped by
the interactions between national and
transnational institutional orders; at the
same time, actors at both levels are engaged
in processes of institutionalization and
de-institutionalization that may redefine
the carriers, forms and modes of this interac-
tion. Consequently, institutional theory
and research must consider the possibility
that multiple layers of institutions and
institutionalization may be relevant for the
subject under study, and that change
processes result from complex and com-
bined processes of institutionalization, de-
institutionalization, and re-institutionalization.
For institutional research, this has concep-
tual, methodological and empirical implica-
tions that we would like to elucidate,
particularly as they relate to organizational
institutionalism, the subject at the heart of
this handbook.
At the conceptual level, our analysis
suggests that institutional systems should be
conceived as open systems that are linked to
each other through cross-border interactions
between various actor groups. The bound-
aries of these systems are permeable, and
the different rule systems are likely to diffuse
in both directions. Social actors are embed-
ded in locally and temporally specific
institutional rules of the game. At the same
time, they become increasingly able to
develop horizons of meaning and action
that reach beyond their local institutional set-
tings. Problems and conflicts between
different institutional logics at the organiza-
tional, societal and transnational level should
therefore be considered as a major source of
institutional change. So far, however, we
know relatively little about the specific
dynamics of change within and between
these different institutional layers. More ana-
lytical concepts that integrate structural fea-
tures of these different layers with relational
and process approaches need to be developed
318 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
in order to discern the interactions between
the different layers. This new analytical
framework must give more attention to inter-
actions between cognitive, normative and
regulatory mechanisms of institutionaliza-
tion and de-institutionalization and to the
specific types of legitimacy that they draw
on. Institutional rules of the game at the
societal (generally national) level are
often backed by legal or regulatory instru-
ments relating to the legitimacy of a demo-
cratically elected government, whereas
institutionalization at the transnational level
relies more strongly on cognitive and cultural
processes of imitation, socialization and
adaptation. Problems and conflicts between
different forms of legitimacy that require res-
olution can therefore be expected. So far,
organizational institutionalism has concen-
trated on the organization and organizational
field level. In future research, organizations
and organizational fields need to be concep-
tualized as social orders that are interlinked
to a variable degree with institutional rule
systems at a higher aggregation level. This
may be the national level, but also the
transnational level.
Institutional research methodologies and
empirical work must better reflect the
multi-layered nature of institutional orders
using a three-point strategy. First, the
research design should better consider the
possibility of a nested hierarchy of institu-
tional contexts. Currently, the level of analy-
sis (i.e., the organization or organizational
field) is often presented as a starting assump-
tion that rarely is justified in the research
paper. It would be useful to have research
hypotheses explaining why a particular
level or interaction between levels was
selected as the object of analysis. Given the
mutual interaction and diffusion between
institutional orders, it would be also helpful
to have hypotheses explaining the points
of openness and closure to external influ-
ences of an institutional layer to other layers
rather then assuming that the defined level
of an institutional system (e.g., the organiza-
tional field or national level) is encapsulated
from the rest of the world (see Crouch 2005:
158; Scott 2001).
Secondly, methodologies should be reori-
ented in order to develop appropriate
research designs for analyzing the interac-
tions between national and transnational
institutions. Global diffusion pattern studies
and comparative analyses of societal
institutional systems do not cover the interac-
tions between different institutional layers
as such. Both neglect cross-border interac-
tions and the mutual interdependence
and co-evolution of national and transna-
tional institutions that may result from these
interactions. The emergence of new analyti-
cal models that assess the emergence
of transnational regulatory or issue fields
from a process perspective and combine
these with a comparative analysis of the
institutional orders from which the partici-
pants in these fields originate, and which in
turn may be affected by the development of
transnational rule setting, is a promising
development.
Thirdly, organizational institutionalism
researchers could make more valuable con-
tributions by employing the available tools
for analysis of global and transnational forms
of organization, ranging from multinational
enterprises and financial and knowledge
intermediaries to more loosely connected
communities and networks and their involve-
ment in processes of institution building and
institutional change. In this way, the results
of organization studies could promote a
better understanding of the role of organiza-
tions as vehicles of transnationalization (see
also Drori et al. 2006) and enrich the interna-
tional relations literature with in-depth
analyses of how processes of dominance,
negotiation and emergence within interna-
tional organizations impact on the wider
institutional environment. At the same time,
organizational studies could also help to
improve the current understanding of
processes related to local interpretation and
translation of global and transnational insti-
tutional rules by analyzing them as nested
layers of an institutional framework.
 INSTITUTIONS AND TRANSNATIONALIZATION
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Westney, E. (1987), Imitation and Innova-
tion. Cambridge, MA: Harvard University Press.
Whitley, R. (1999), Divergent Capitalisms.
Oxford: Oxford University Press.
Whitley, R. (2003), Changing transnational
institutions and the management of
international business: The impact on
national business systems, in Djelic and
Quack (eds.), pp. 108–133.
Zeitlin, J. and G. Herrigel (2000) (eds.),
Americanization and its Limits. Oxford:
Oxford University Press.
Zucker, L.G. (1977), The role of institutionaliza-
tion in cultural perspective, American
Sociological Review 42: 726–743.
 SECTION III

Applications

Traditions as Institutionalized
Practice: Implications for
Deinstitutionalization
M. Tina Dacin and Peter A. Dacin
Institutional theory provides a powerful lens
for explaining individual and collective
action. Recently, increased efforts towards
understanding how institutions are created
have led to a systematic development of
ideas on institutional entrepreneurship and
attention to processes and mechanisms of
institutional construction. Despite this
growing rise of interest in how institutions
are created, we still know relatively little
about the process of deinstitutionalization.
Many questions remain concerning how
institutions wax and wane or diminish in
potency over time and the processes that
shape the erosion and extinction of institu-
tionalized practices.
While a few studies examine institutional
decline within the framework or boundaries
of studying institutional change (Dacin,
Goodstein, & Scott, 2002), efforts to unpack
the strategies and dynamics associated with
extinction are lacking. Scott defines deinsti-
tutionalization as the ‘process by which insti-
tutions weaken and disappear’ (2001: 182).
Important theorizing on deinstitutionali-
zation was put forth by Oliver (1992).
Oliver’s framework was the first to
pay explicit attention to the erosion and
extinction of institutionalized practices.
12
The framework proposed that the dissipation
or rejection of an institutionalized practice
was a result of a set of political, functional,
and social pressures. The dissipation or rejec-
tion then leads to deinstitutionalization,
which, in turn, leads to erosion and/or extinc-
tion. For Oliver, deinstitutionalization is ‘the
process by which the legitimacy of an estab-
lished or institutionalized organizational
practice erodes or discontinues’ (1992: 564).
A number of studies examine processes of
decline and erosion, including erosion via
replacement as in the case of classic French
cuisine (Rao, Monin, & Durand, 2003); strat-
egy abandonment in radio formats (Greve,
1995), ideological and political obsolescence
of CEOs with finance backgrounds (Ocasio
& Kim, 1999), impact of downsizing in dein-
stitutionalizing permanent employment prac-
tices in Japan (Ahmadjian & Robinson,
2001), and the shedding and shunning of the
conglomerate form (Davis, Diekmann, &
Tinsley, 1994). An interesting observation
from these studies, however, is that institu-
tionalized practices are rarely ever com-
pletely extinguished. The practice continues
albeit weaker in scope (extent of diffusion) or
potency. These studies also suggest that vari-
ous features or elements of institutionalized
328 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
behaviors continue and serve as either a
reminder of prior strategies and/or as raw
material for the construction of new ones.
We take these findings as a starting point for
our chapter to understand the nature of tradi-
tions and how traditions erode and become
extinguished. As we discuss below, we focus
on traditions because, while they share
commonalities with institutionalized prac-
tice, they also have some unique qualities
that make them relevant for understanding
deinstitutionalization.
In order to understand the process by
which traditions erode, we summarize a
recent illustration of a single tradition in an
organizational setting and its evolution over
time. We consider traditions to be institution-
alized practices or collections of such prac-
tices and subsequently focus on developing
implications for understanding the process of
deinstitutionalization. We do this through an
application and extension of Oliver’s frame-
work of deinstitutionalization in the context
of examining the life history of a single tra-
dition over time. Before presenting our case
study, we want to clarify what we mean by
traditions and how they erode. Towards the
end of our chapter, we demonstrate how our
story reveals important insights for under-
standing the erosion and extinction of institu-
tionalized practices.
The tradition we examine in this chapter is
Texas A&M University’s ‘Aggie Bonfire,’ a
tradition that existed for a period of 90 years.
As we later explain, we chose this tradition
because it is a rich tradition that underwent a
process of deinstitutionalization and fits well
within the context of Oliver’s (1992) deinsti-
tutionalization framework. The case of the
Aggie Bonfire is especially rich in helping us
to unpack the nature of organizational tradi-
tions and implications for the study of
change in institutionalized practices. It has
been studied by scholars in management
(Beyer & Nino, 2000) as well as cultural
geography (Smith, 2004) and described in
rich detail by journalist Irwin Tang (2000).
The insights we gain from our understand-
ing of the deinstitutionalization of Bonfire
will also allow us to offer several contributions
towards a fuller and richer understanding of
deinstitutionalization. First, in order to
understand the processes that contributed to
the decline of tradition and institutionalized
practices of Bonfire, we bring together liter-
ature from work on culture, social move-
ments, and institutions.
Second, we are able to extend Oliver’s
(1992) framework in important ways
by highlighting the roles played by custo-
dians (Soares, 1997), collective memory
(Hawlbachs, 1950; Zerubavel, 1997), collec-
tive identity and ritual in preserving institu-
tionalized practices as well as distinguish
between core and ancillary institutional
dimensions and the role they play in the ero-
sion of an institutionalized practice. We fur-
ther suggest that this erosion leaves behind
an institutional ‘remnant’1 which forms the
raw material for the emergence of new insti-
tutional practices or re-emergence of old
institutional practices. As long as there exist
remnants, an institutionalized practice is
never extinguished or completely deinstitu-
tionalized. Finally, we suggest several direc-
tions for future work in this area with a
particular focus on the strategic management
of traditions.
We begin by summarizing existing views
on the nature of traditions and relate
these views to institutionalized practices.
Following this, we briefly review Oliver’s
(1992) framework for deinstitutionalization
and then apply this framework in the histori-
cally rich case of the Aggie Bonfire, a case
that demonstrates the evolution and erosion
of a single tradition over time. We then illus-
trate how the understanding we gain through
this case study allows us to offer both an
application and extension of Oliver’s (1992)
framework of deinstitutionalization.
THE NATURE OF TRADITIONS
Traditions are important across many con-
texts. Think of military and religious tradi-
tions or the tradition of Christmas and
 TRADITIONS AS INSTITUTIONALIZED PRACTICE
Thanksgiving. There are scientific traditions
(see Kuhn, 1962, for example) and oral tradi-
tions as well as industry orthodoxies or tradi-
tional ways of doing business. Traditions
have been widely studied in sociology,
anthropology, cultural geography, political
science and marketing.
A brief summary of more recent work on
traditions can be found in Soares (1997). For
Soares, there exist several themes or views
that define much of the work on the nature of
traditions. Drawing on ideas by Freud and
Marx, traditions are conceived as restraints
or the constraining hand from the past that
defines and limits current action. A second
view of tradition is tradition as taken for
granted or unreflective habit as found in the
writings of Weber. However, Soares (1997:
10) notes that Weber’s position on tradition
has a tendency to equate tradition and cus-
toms. Soares views the two constructs as
quite distinct in that while customs involve
unreflective habit, traditions, on the other
hand, possess a collective memory and a set
of custodians aware of the past.
A third view is provided by Shils (1981)
who has written the most extensive treatment
on the subject of understanding tradition. For
Shils, the study of tradition was largely
ignored by mainstream sociology. Shils’s
view of traditions is to think of them as a
source of continuity with the past or as
cultural ‘inheritance.’ The notion is quite
broad and could mean anything that is passed
down or inherited to the present. For Shils,
traditions incorporate a variety of beliefs,
objects, memories, imagery, practices and
institutions (1981: 12). Shils introduces tra-
dition as something that has exemplars or
custodians, not so much because of its prior
existence but possibly also because it has a
‘quality of pastness’ that appeals to current
practitioners (1981: 13). Therefore, in order
for traditions to be successfully transmitted
and repeated, it is likely necessary that they
also need to be authentic or genuine (Sapir,
1949)2 in order to be accepted or taken for
granted as appropriate and legitimate. While
Shils (1981) acknowledges the introduction
329
of variation in traditions over time, he also
regards traditions as having an invariant core
and as being intergenerational. He also sug-
gests that a practice has to survive at least
three generations in order for it to be consid-
ered a tradition. In Shils’s view, as traditions
evolve the accumulation or removal of new
elements leave other aspects relatively
unchanged. Take, for example, the tradition
of convocation. Convocation is a tradition
with multiple elements, some core and some
ancillary. Convocation involves a number of
elements such as having one’s name called
out, receiving a diploma as well as the pro-
cession, granting of an honorary doctorate,
and various material and symbolic elements
such as the adornment of a convocation gown
and the various colors observed in convoca-
tion hoods and caps. Some of these elements
take on greater or lesser meaning (potency)
and evolve into core elements in a particular
context based on region, profession, or past
practice. However, there are also some
elements widely shared or core across all
convocations (scope).
Elements of a given tradition are passed
down to successive generations. The invari-
ant core of a tradition provides impetus and
resources for future generations to accept and
enact a tradition. The transmitted material
can take the form of a combination of core
and ancillary elements in the form of ‘rem-
nants’ – a limited amount of raw material that
can form the basis for reinventing existing
traditions or constructing new ones.3 This
core or essence can take the form of a
number of elements, including but not lim-
ited to a name, an identity, location, activity
or imagery. A sense of identity with the past
evolves and a sense of community or collec-
tive identity with the present emerges (Shils,
1981: 14). There are important normative
implications of traditions as they provide not
only continuity between the past and present
but define what is deemed appropriate in the
present. An irony of traditions, as studied
from Shils’s view, is that while traditions
place limits or constraints on what can be
changed or how things change, traditions
330 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
themselves are continuously evolving and
changing.
Hobsbawm (1983) provides a fourth view
of understanding tradition by regarding them
as invented. Hobsbawm builds on the idea of
continuity but provides a different rationale
for the construction of traditions in that they
are created by elites that construct them to
assert and reify their power. Hobsbawm also
examines the process of how traditions are
‘invented’ as well as how they change.
Innovations and redesign of traditions come
about as a result of a change in practices
fueled by the interests of those in power.
For Hobsbawm, traditions are an invariant,
repetitive set of symbolic activities rooted in
the past:
a set of practices, normally governed by overtly
or tacitly accepted rules and of a ritual or symbolic
nature, which seek to inculcate certain values
and norms of behaviour by repetition, which
automatically implies continuity with the past.
(Hobsbawm, 1984: 1)
Soares raises an important critique regarding
Hobsbawm’s work, in that his defini-
tion makes it difficult to distinguish the
notion of tradition from ritual. According to
Soares, Hobsbawm’s contribution was to
allow for a clearer delineation between
traditions and customs in that traditions are
more stable structures, whereas customs
evolve to fulfill more pragmatic needs
(Soares, 1997: 11).
Soares (1997) builds on this earlier work
and provides a valuable extension for
understanding the nature of tradition more
broadly. Soares provides the following
definition:
a living social tradition requires a distinct social
group with a common identity derived from an
interpretation of its past, whose collective memo-
ries have some objective expression in the material
environment, and whose activities are guided by a
spirit of continuity. (1997: 16)
Especially relevant for our discussion is
that both Shils (1981) and Soares (1997)
give explicit attention to the role of custodi-
ans in preserving and enhancing traditions.4
Custodians are exemplars or practitioners of a
given tradition linked by collective memories.
Custodians value their inheritance and ‘feel a
sense of custodianship for the tradition’s
present and future prospects’ (Soares, 1997:
14). Soares views traditions as ‘a resource
warehouse for the living’ (1997: 15) and is
the most dynamic approach to understanding
the nature of traditions. In his view, the past
provides values and solutions that can be
mobilized to deal with today’s problems.
TRADITIONS AS INSTITUTIONALIZED
PRACTICES
We conceive of traditions as a construct
residing at the intersection of institutional
theory, as well as scholarly work on culture
and social movements, in that they draw
upon values, the normative implications
and mobilization of such values and value-
laden structures, and are oftentimes much
more stable and enduring than customs or
conventions. In this chapter, our focus is
more on, as Soares put it, ‘living social’ tra-
ditions and traditions that are organizational
in nature.
It is relatively easy from a review of the
more extensive treatments of tradition in the
literature (Hobsbawm & Ranger, 1984; Shils,
1981) to identify a number of characteristics
that define organizational traditions. They
are infused with value and meaning and are
oftentimes associated with myths or narra-
tives about their creation or continued exis-
tence. They are repositories of collective
memories and identities, building social
cohesion via symbols and/or ritual as well as
shared experiences or imagined communities
(Andersen, 1991). They involve resource
mobilization and utilization and are pro-
tected and enhanced by custodians.
Traditions imply continuity and thus are
quite stable, enduring, and repetitive.
Traditions can be broad or narrow in scope
(global versus more local or regional tradi-
tions) in terms of their diffusion and con-
sumption, as well as vary in potency over
 TRADITIONS AS INSTITUTIONALIZED PRACTICE
time and place. Finally, traditions also have a
temporal dimension (Zerubavel, 1997).
Given this broad range of dimensions,
characteristics and components, we believe
it is useful to think of traditions and consider
their evolution in three important ways. First,
we regard traditions as institutionalized orga-
nizational behaviors or practices. According
to Oliver (1992), ‘institutionalized organiza-
tional behaviors’ are ‘stable, repetitive and
enduring activities’ º ‘infused with value,’
repetitive and resistant to change.5 However,
we relax the assumption that institutionalized
practices are ‘taken-for-granted’ as this
makes traditions more akin to customs or
conventions. Given our earlier summary of
work on traditions, we concur that traditions
are much more than unreflective habit and in
fact are created and managed by mindful
custodians.
Second, we agree that traditions change
frequently in that they adapt to suit the
needs of ‘the living’ or the needs of the
present (Hobsbawm, 1984; Shils, 1981;
Soares, 1997). Consequently, we also relax
the assumption that institutionalized prac-
tices are highly resistant to change. We
address the issue of institutional stability and
endurance by distinguishing between core
and ancillary elements of traditions. At the
field level, DiMaggio (1988) notes the pres-
ence of core and subsidiary institutions.
Following Shils (1981), we think of tradi-
tions as collections and/or containers of core
and ancillary micro-institutions and cultural
elements that may include symbols, material
objects, myths, custodians, rituals, temporal
qualities as well as collective identities and
memories.
By making the distinction between core
and ancillary elements we are able to theo-
rize about core and enduring qualities of tra-
ditions versus those that are more malleable
yet in some ways relatively ancillary. This
distinction allows us to consider both erosion
and persistence of institutionalized practices
as well as consider changes in scope and
potency of institutionalized practices over
time. For us, the core elements of traditions
331
consist of an interconnected pattern of mean-
ings, custodians, collective memories, and
some but not all ritualized activities.
In this chapter we are interested in expand-
ing our understanding of how institutional-
ized practices erode and extinguish. We
believe that understanding the evolution of
traditions will further our understanding of
institutional change and deinstitutionaliza-
tion. We next examine how traditions
become extinguished.
ENHANCING, ERODING AND
EXTINGUISHING TRADITIONS:
THEORETICAL FOUNDATIONS
In this chapter we pay special attention to
processes associated with change and its
outcome on the evolution of traditions as insti-
tutionalized practices. We contend that adap-
tation or change in institutionalized practices
may result in either erosion or enhancement.
As we demonstrate in our case study below,
the tradition of the Aggie Bonfire changed
frequently but those changes served many
purposes, including both the erosion and
enhancement of its potency over time.
One theoretical starting point for examin-
ing outcomes that result from changes in tra-
ditions is deinstitutionalization, or ‘the
process by which institutions weaken and
disappear’ (Scott, 2001: 1982). Oliver (1992)
applied deinstitutionalization to specific
activities or practices that appear institution-
alized in organizations. Her framework for
the deinstitutionalization of institutionalized
practices suggests that dissipation or rejec-
tion of institutionalized practices is driven by
political, functional, and/or social pressures
that lead to deinstitutionalization (Figure
12.1). If these pressures lead to a gradual
deterioration in the acceptance and use of an
institutionalized practice, Oliver terms this
process to be dissipation. The decline in
freemasonry or volunteerism would be an
example of dissipation of an institutionalized
practice (Putnam, 2000).
332 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Political
pressure
Entropy
Functional Dissipation
pressure and rejection
Inertia
Social
pressure
Figure 12.1 A deinstitutionalization framework – Oliver (1992)
Both entropy pressures and inertial pres-
sures moderate the rate of dissipation.
Entropy consists of pressures that accelerate
the process of deinstitutionalization while
inertia consists of pressures that impede it.
On the other hand, if the validity of the insti-
tutionalized practice is directly challenged
we could have rejection rather than dissipa-
tion of the practice. As a result of dissipation
or rejection the practice could become dein-
stitutionalized, which then leads to its erosion
or discontinuity.
With respect to the three antecedents,
Oliver (1992) suggests that political pres-
sures occur as a result of the utility or legiti-
macy of the practice being called into
question. This tends to occur under condi-
tions of mounting performance crises, the
growth in the criticality or representation of
organizational members whose interest or
beliefs conflict with the status quo, increased
pressures on the organization to adopt
innovative practices, and/or the reduction in
the dependence on the institutional con-
stituents that have encouraged or enforced
continuing procedural conformity with their
expectations.
The second antecedent, functional pres-
sure, exists when changes to the perceived
utility or technical instrumentality of a
practice occur, or when there is redistribution
in organizational power. Oliver (1992) iden-
tifies this antecedent as having an effect
under a variety of conditions, including when
institutional constituents in the environment
Deinstitution- Erosion or
alizaton discontinuity
withdraw the rewards associated with sus-
taining an institutionalized organizational
activity, when social and economic
criteria of organizational success begin to
conflict significantly with one another,
and/or when the organization experiences an
increase in its technical specificity or goal
clarity.
The third antecedent, social pressures, rep-
resents a condition under which an organiza-
tion is neither a proactive agent of
deinstitutionalization nor centrally intent on
abandoning or rejecting particular institu-
tional traditions. According to Oliver (1992),
social pressures include increasing normative
fragmentation within an organization as a
byproduct of other organizational changes,
disruptions to the organization’s historical
continuity, changes in state laws for societal
expectations that prohibit or discourage the
perpetuation of an institutional practice,
and/or lower structural changes to the organ-
ization or the environment within which the
organization resides that disaggregate collec-
tive norms and values.
In addition to the work in the deinstitution-
alization literature, the literature on traditions
provides additional insights into various
responses to these pressures that may occur.
For example, as Oliver (1992) notes, institu-
tional practices can cease to have value or
utility for either their custodians or practi-
tioners, as a result of political, functional or
social pressures. When this occurs in the con-
text of a tradition, Shils (1981) suggests that
 TRADITIONS AS INSTITUTIONALIZED PRACTICE
custodians and practitioners may react by
loosening their acceptance of or adherence to
the tradition.
Traditions can deteriorate in the sense of losing
their adherents because their possessors cease to
present them or because those who once received
and reenacted and extended them now prefer
other lines of conduct or because new generations
to which they were presented find other traditions
of belief or some relatively new beliefs more
acceptable. (1981: 15)
The literature on traditions suggests that a
second type of response to political, func-
tional and social pressures may be one of
overcorrection as custodians and practition-
ers attempt to reframe or revise elements that
have become problematic or inconsistent
over time (Shils, 1981). Changes in tradi-
tions, however, could also lead to increasing
complexity, making transmission of the tra-
dition increasingly difficult and imperfect.
Another type of reaction to changes in regu-
lative, normative, and cognitive dimensions
of the tradition is one of significant decou-
pling between the symbol and substance
and/or performance of traditions. In the con-
text of strategic responses to institutional
pressure, Oliver (1991) describes this
response as avoidance. Finally, reactions to
these pressures may also lead to the emer-
gence of countervailing social movements to
mobilize resources and momentum either
against or for the tradition. An interesting
and more recent example of this would be
efforts mobilizing worldwide support and
advocacy for the promotion of slow food
(Rao & Giorgi, 2006) or the decline of fois
gras (DeSoucey, 2006). The popular press in
Marketing is rife with attention on the rise of
‘counter-culture’ movements against tradi-
tion. Integrating the tradition’s literature
into our understanding of the enhancement,
erosion and extinction of institution-
alized practices allows us to extend Oliver’s
(1992) framework to include some additional
insight as to the various responses that may
occur as a result of political, functional
and social pressures. We also believe that
insights on traditions help us to unpack the
333
process of dissipation. In particular, there
exist several mechanisms through which dis-
sipation can occur. These mechanisms
include assimilation, dilution, disembedding,
competition and erasure.
Assimilation involves being absorbed into
a new tradition. Shils (1981) describes how
Roman religion ceases to exist yet some of
its elements have been synthesized or incor-
porated into modern Christianity (p. 25).
Dilution involves adding or importing new
elements into a given tradition or expansion
of the core elements till it is difficult, com-
plex, or involves changes in value for custo-
dians or practitioners (declining for some
while increasing for others) of the tradition.
Cherlin (2004) describes the weakening of
social norms defining the idea and practice of
marriage. Recent debates over the definition
of marriage in North America point to the
potential dilution of the meaning of the prac-
tice but also shed light on the changing value
of this practice for various custodians or
practitioners of the tradition.
Disembedding involves disconnecting or
dismantling core elements from each other
insomuch as there is no longer a definable or
‘interconnected’ pattern of tradition or insti-
tutionalized practice (Jepperson, 1991).
Competition involves the presence of other
traditions that vie for the attention and sup-
port of key constituents. These competing
alternatives present conflicting claims and
are referred to by Shils (1981) as ‘alien’ in
nature. The potential for institutional colli-
sions as a result of competing traditions is
exacerbated when the potency of custodian-
ship is weak, collective memory is scarce,
and multiple identities prevent solidarity of
practice. Erasure, while rare, involves
removal or replacement of core elements
such as core rituals or collective memories.
Examples would include attempts by media
or historians to revise history.
By integrating several approaches and the-
ories about institutionalized practices and
traditions, we are able to extend Oliver’s
(1992) framework in several ways. This
allows us to clarify different responses to the
334 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
various antecedent pressures for deinstitu-
tionalization. From a strategic perspective,
doing this also provides some insights for
examining how these different responses, in
turn, affect dissipation or rejection. Our
extension also allows us to unpack the notion
of dissipation, thus providing some insight as
to the various underlying mechanisms
through which dissipation of traditions and
other institutionalized practices occur.
Finally, the integration allows us to introduce
the notion of an ‘institutional remnant’ that
suggests that, even after a tradition or institu-
tionalized practice appears to have eroded,
there may be sufficient remnants of the
original tradition to lead to a new tradition,
or a re-invention or even re-emergence of
the original tradition or institutionalized
practice.
TEXAS A&M UNIVERSITY:
A CASE STUDY
Texas A&M University is a public institution
founded in 1876 in College Station, Texas. In
the early days, the University had an undefined
mission and was ‘all-male and all-military’
(Jacobs, 2002: 13). It wasn’t until after 1891
that the University President declared military
training as part of its central mission (Jacobs,
2002). The students, known as Aggies, are
known for their spirit and camaraderie.
It is currently one of the largest academic
institutions in the United States with a cur-
rent enrollment of over 46,000 students and
an endowment valued at over 4 billion US
dollars (www.tamu.edu). As a consequence
of early state politics and fights over funding
and mandate (Jacobs, 2002; Smith, 2004;
Tang, 2000), the University developed a
culture that distrusted outsiders. Due to
state politics and football, Texas A&M
has developed a fierce rivalry with the
University of Texas at Austin over time.
While the University of Texas at Austin had
a broader mandate that included a broad,
arts- and science-based curriculum, Texas
A&M, in contrast, had an agricultural and a
mechanical engineering focus.
Traditions play a central role at the
University. In fact, Tang (2000: 7) notes that
‘Traditions, and the value of Tradition, dictate
Texas A&M culture.’6 The University has sev-
eral traditions based around remembrance,
symbols, team spirit, and building community,
Corps of Cadets, and various class councils
(http://aggietraditions.tamu.edu/). Some of
these traditions are relatively more recent
while others have been in existence for over
100 years. For example, Big Event, a large
student service project, was started in 1982
while Muster, a remembrance to those who
have passed, began in 1883.
From its inception, Texas A&M sought to
establish itself as a distinctive institution by
priding itself that it offered its students what
came to be known as the ‘other’ education.
As a result of its military heritage or the need
to establish its distinctiveness from the
University of Texas at Austin, A&M prided
itself on its ability to provide opportunities
for its students to build character and acquire
leadership skills. One of these opportunities
was the Aggie Bonfire, regarded by many as
the largest student organized project in the
United States.
THE TRADITION OF AGGIE BONFIRE
The case of the Aggie Bonfire is especially
rich in helping us to unpack the nature of
organizational traditions and implications for
the study of change in institutionalized prac-
tices. The evolution of the Bonfire tradition is
a story occurring over a period of 90 years
from its emergence in 1909 to its significant
deinstitutionalization in 2002. Our historical
description and analyses are based on an
extensive review of public documents and
archival news sources7. We synthesized his-
torical data and key insights into an extensive
set of notes, timelines and tables in order to
make sense of and validate the information
collected.
 TRADITIONS AS INSTITUTIONALIZED PRACTICE
Many university campuses light bonfires
but the Aggie Bonfire is distinctive because it
was the largest and most complex student-
run project in the United States (Tang, 2000).
It is said that the construction of the Bonfire
structure involves more than 125,000 hours
of student time with about 70,000 individuals
turning out to observe the final ritual of Burn
(Jacobs, 2002).
Bonfire can be regarded as a ritualized tra-
dition (Smith, 2004) consisting of myth and
meaning systems, custodians, central and
peripheral rituals, as well as collective mem-
ories shared among custodians and key con-
stituents. At Texas A&M University, a
tradition of Bonfire is inextricably linked to
football. The Aggie Bonfire grew to be more
than a mere fire. Of all the traditions at Texas
A&M University, the Bonfire was regarded
as the most central and important (Tang,
2000). Bonfire’s purpose was to maintain and
instill loyalty as well as provide a symbol
representative of the rivalry with the
University of Texas at Austin. Bonfire was
regarded as being representative of the
‘Aggie Spirit’ and for the first 50 or so years
went largely unquestioned.
Bonfire fulfilled numerous needs of the
student body. It allowed students to forge
friendships, vent aggression, and demon-
strate courage. In other words, it provided a
good training ground for the other education
that A&M deemed shaped its unique charac-
ter. While numbers vary, it is estimated that
more than 6000–8000 trees are cut each year
to build Bonfire (Jacobs, 2002). Thousands
of spectators (students, former students and
members of the local community) turn out to
watch the fire burn. There was no written
construction plan or blueprint nor was there
any professional supervision. There was,
however, an elaborate, hierarchical organiza-
tion that guided the practice of the Bonfire
tradition each year. This structure was largely
patriarchal (consisting of men in leadership
roles) and intergenerational. At the top of the
Bonfire hierarchy were a group of senior
students known as Red Pots. These Red
Pots would pass along knowledge to other
335
members of the Bonfire hierarchy. A fresh-
man entering the university would grab the
attention of someone more senior in the
Bonfire organization by doing something
risky or brazen during the rituals associated
with Cut or Stack. Once noticed, this student
would be selected to take on increasing
responsibility in future years.
Over the years, three rituals had become
central to Bonfire – Cut, Stack, and Burn.
Each of these rituals contained its own set of
activities, thus each served as a meta-ritual.
Cut involved gathering the necessary logs
starting in early October. The ritual known as
Stack involved assembling the logs into what
will become the Bonfire. Push was part of
Stack and occurred for the two weeks prior to
Burn. The push is to finish with students
working round the clock in shifts to ensure
the Bonfire is built on time. The ritual of
Burn occurs on the night preceding the
annual football game with the University of
Texas.
As mentioned, within each of the core rit-
uals of Cut, Stack, and Burn, there were sev-
eral activities or ancillary elements
associated with the tradition. For example,
‘groding’ involved being thrown in mud at
the construction site with food and/or feces
while others went unshaven or unwashed for
weeks as a means of demonstrating one’s
loyalty or devotion to the tradition and to the
Aggie spirit (Smith, 2004: 42). On the night
of Burn, the Aggie Band, Yell Leaders, and
Red Pots paraded around the Bonfire, in turn.
The Red Pots, the last to circle Bonfire,
would carry the torches that would set fire
to the structure. The fire, helped along by
700 gallons of diesel fuel soaked into the
logs was visible for quite a distance.
In the remainder of this case study, we
break down our examination of the evolution
of the Aggie Bonfire over four distinct peri-
ods. By doing so, we are able to track the
evolution of this tradition on a variety of
important dimensions and relate our insights
directly to Oliver’s (1992) framework for
deinstitutionalization. We pay particular
attention to the essence, custodians, rituals,
336 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
myths/stories, symbols and physical artifacts,
as well as changes in place and temporality.
We also provide insight into the changing
nature of the organization in which the tradi-
tion was embedded by summarizing the char-
acter of the organization, its key constituents,
key success factors, and strategic arenas.
With respect to Oliver’s framework, we will
demonstrate how these dimensions relate to
the antecedent pressures, entropy and inertia
that comprise the framework.
Period 1: the tradition emerges
(1909–1942)
According to several sources (Dethloff,
1976; Jacobs, 2002; and especially Tang,
2000) the Aggie Bonfire began in 1909 as a
prank to arouse interest and excitement in an
upcoming Texas A&M – University of Texas
at Austin football game. The tradition arose
out of humble beginnings. The first Bonfire
comprised a pile of scrap wood and trash
boxes gathered from all over campus, and
deposited in a central gathering place. At
this time, A&M was a military college, so the
parade ground served as a symbolic center-
piece for events.
The participants were primarily students
and events around Bonfire were primarily a
pep rally. In these early years, the bonfire
was relatively small in nature (about 10–12
feet high) and bore resemblance to a pile of
trash. In 1915, the Aggies beat UT-Austin in
a legendary game and a bonfire of trash and
dry good boxes was spontaneously con-
structed and burned after the game but this
time in the streets of Bryan, a nearby town.
The intensity of the fire exploded the pave-
ment beneath the bonfire, but the community
felt that it was really nothing and could easily
be remedied. This was the first time the com-
munity had any involvement in Bonfire. This
was also the only time Bonfire was built after
the game and not held on the A&M campus.
For the next 25 or so Bonfires, students
and community members were asked to
supply boards and boxes. By the 1930s this
appeal for burning material expanded to
involve the state and the railroad companies
who helped to bring in wood and boxes from
all over the state.
In 1933, following a complaint from a
farmer that students had dismantled and car-
ried off his log barn, an order was issued in
1936 that ‘no one would be allowed to collect
Bonfire materials or place them on Bonfire
other than authorized personnel’ and that the
building of Bonfire would be under the direc-
tion of the Commandant. It was also in this
year that A&M received permission to
remove dead trees from a nearby field in
which an airport had been built. For the next
six years Bonfire continued to take on many
forms under the direction of the
Commandant, but it remained primarily a
‘trash pile.’
In these early years, the Bonfire tradition
was tightly coupled with the university’s
goals and identity. In these early years, the
University’s focus of attention was largely
directed inward towards the preservation of
its distinctive character and goals. Bonfire
epitomized this distinctiveness and grew in
importance within the University. The tradi-
tions at Texas A&M, and the tradition of
Bonfire in particular, produced important
outcomes. Bonfire provided an important
vehicle for the early custodians, the Corps of
Cadets, to establish their power and legiti-
macy on the campus and in the community.
As keepers of the tradition, the Corps could
be regarded as the key custodians of this
important tradition. These custodians worked
to promote and preserve the role of traditions
at the University. As noted by Jacobs’s recent
history of the Corps at Texas A&M:
The Cadets began to bond and, in turn, to foster
traditions – some born out of boredom and bulls
sessions, but most derived from respect, loyalty,
and values that came with a conservative, military
lifestyle. (Jacobs, 2002: 14)
The power of the Corps of Cadets at the
University is critical in understanding the
evolution of Bonfire as well as other tradi-
tions that define the campus and serve to dis-
tinguish it from other organizations. In fact,
 TRADITIONS AS INSTITUTIONALIZED PRACTICE
as recently as 1993 and according to the Blue
Ribbon Committee on the Corps, they had a
prominent and central role on the University
campus:
The Corps of Cadets remains a vital and relevant
part of the overall University community today,
both as the ‘keeper’ of many of the University’s
cherished traditions and as a repository and cham-
pion of values that make Aggies and Texas A&M
truly unique. (Adams, 2001: 264)
During this period, except for minor inci-
dents, Bonfire faced few if any pressures. In
fact, the community was willing to accept the
minor incidents and contributed by helping
in the gathering of items for Bonfire. During
this period, the activities around Bonfire con-
tinued to evolve, the core elements began to
take shape and the ancillary elements were
focused on establishing the core elements.
The reactions to the various incidents all
served to further entrench the Corps and its
Commandant as the custodians of Bonfire
with the community and, by the end of the
period, the State, reinforcing and legitimiz-
ing this role. In essence, any pressures
including entropy were quickly countered
through the Commandant’s garnering more
control over Bonfire and thus establishing a
point of responsibility so that it was no
longer just a ‘prank’ by students, but became
a legitimized organized practice that had
become institutionalized.
While recent ideas on institutional entre-
preneurship have tended to focus on the pres-
ence of purposeful action in constructing
institutions we observe that they can also
emerge from humble beginnings or out of
serendipity.
Period 2: entrenchment (1942–1963)
By 1942 it was clear that Bonfire had under-
gone a distinct transformation to a very
military-like activity which began a long his-
tory of building bigger and better Bonfires.
The addition of a center pole (a log stuck into
the ground supporting other logs stacked
against it) allowed the height to reach 50 feet
337
by 1946. Local filling stations donated hun-
dreds of gallons of oil to saturate the logs and
assist in their lighting. As the Commandant
was now securely in charge, flow charts
and instructions as to who was in charge and
the chain of command became the norm.
To prevent early lighting or vandalism
by University of Texas students the
Commandant ordered eighteen 24-hour
guards posted, organized in several rings
with orders that no one be allowed into the
innermost rings without clearance. By 1954
the Bonfire reached 73 feet tall.
In 1955 the first Bonfire-associated death
occurred when a Cadet at a guard post
pushed another student out of the way of an
oncoming truck, was hit himself and later
died of his injuries. By this time, the number
of individuals involved in Bonfire was quite
large and the military traditions around
Bonfire were evolving, including the posting
of guards as well as the first ‘war hero’ who
‘died in action.’
Soggy ground in 1956, as a result of
steady rain, saw the Bonfire stack collapse
after the center pole started leaning. But with
military precision Bonfire was rebuilt with
students hauling logs by hand for as much as
half a mile since trucks could not get through
the mud.
As the entrenchment of the tradition grew,
it was not unusual to allow Cadets to be
excused from a day of class in order to work
on Bonfire. By 1958, time being taken away
from academic work due to Bonfire was
becoming an issue. To counter this issue, in
1958 the university decreed that Bonfire had
to be built in three days (instead of the usual
ten days) and students worked all day and
night non-stop, having food brought to them
at the work site. Over time this three-day
time limit was relaxed to the point where it
became two months in recent years.
To summarize, this was a critical period
in Bonfire’s evolution. Given the all-
male nature of the University during this
period, Bonfire took on ‘additional meaning
as symbol and proof of Aggie masculinity’
(Smith, 2004). During this period, the Corps
338 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
also entrenched themselves as the keepers of
this tradition and the Bonfire was a symbolic
triumph of the University’s core values and
source of distinctiveness. Traditions at A&M
and their primary custodians, the Corps of
Cadets, provided enormous strategic benefits
for the University. The ‘spirit of Aggieland’
was its ‘longtime intangible’ (Jacobs, 2002:
14). As this spirit grew the University was
able to make unique claims about the experi-
ences it offered to its student community,
while at the same time benefiting enor-
mously from the cohesion and collective
identity its traditions conveyed for other
powerful constituents such as the Former
Students and local community.
Throughout this period, the Corps of Cadets
were the central custodians of the Bonfire and
through this and other traditions the Corps
worked hard to find ways to preserve and
enhance their power and position on campus.
They did so by making claims that they pro-
vided much-needed links to the past as well as
the provision of character and leadership
development. While the Corps saw declining
numbers during World War II, they saw a
return to dominance on the campus by the
1950s. The Corps and the University began to
gain increasing notoriety for their prowess in
building bigger Bonfires. In fact, by the mid-
1960s, Bonfire was regarded as a key distinc-
tive feature of the University (Smith, 2004).
The University endorsed these traditions and
student recruiting films and campus orienta-
tion films often gave prominence to traditions,
especially to Bonfire.
Even in the midst of safety concerns raised
by the Assistant to the Commandant, the
1960 Bonfire stood over 100 feet tall. In
1963, the death of John F. Kennedy resulted
in the first cancelled Bonfire.8
Continuing from the first period, it was
clear that this period was the one in which
the Corps were firmly entrenched as the cus-
todians of Bonfire. Integrating Bonfire with
military myths and traditions only served to
reinforce this and the University continued to
legitimize the tradition to the point where
they proudly displayed this as a distinguishing
feature of the University. In other words, the
tradition was now being used as part of the
University’s identity. The community
increased its participation, but only at the
periphery, and the Bonfire (i.e., the identity
of the University) became sacred ground for
the Corps to defend as they would do in
battle. Through the protection of sacred
ground, the core elements for Bonfire began
to become more and more entrenched. As the
identity of the University began to also
include Bonfire in its definitions, the ele-
ments associated with Bonfire were also
becoming part of the University’s identity.
As in the previous period, there were very
few pressures brought against Bonfire, but
when any arose, such as safety concerns, the
custodians of Bonfire took it on themselves
to take care of the issues. When issues arose
about how Bonfire might be affecting aca-
demic standards, the reaction by the
University was not to question the utility of
Bonfire, but simply to shorten the timeframe
during which Bonfire was to be built. While
there might have been a very slight emergent
concern about the quality of academics in
this period, the reaction offered by the
University suggests that traditions were still
very important, as the solution (shortening
the build by a week) probably did nothing to
enhance academics, but it was a way to
acknowledge the concern about missing
classes by allowing students the time to
attend classes. This provided further legiti-
macy to Bonfire as it demonstrated that the
University, although not the custodian of
Bonfire, wanted it to continue to exist and
while the ancillary elements had to change to
accommodate the change in timeframe, these
changes only reinforced the importance of
the core elements. This is also seen when the
students hauled the logs by hand – that is, the
ancillary rituals changed but they were
changed so that the core rituals of the Cut,
Stack and Burn could be maintained.
As all this was happening, it was clear that
the myths and rituals of Bonfire were becom-
ing more and more entrenched, not only with
the Bonfire tradition, but also at the level of
 TRADITIONS AS INSTITUTIONALIZED PRACTICE
the University’s identity. If there was any
question whatsoever in the previous period,
it was now absolutely clear in this period
that Bonfire had become an institutionalized
practice. Interestingly, while Bonfire started
out as closely coupled to football games,
during this period one could see a decou-
pling from football games and a stronger
coupling of the traditions and the University;
in essence, it was becoming a stand-alone
tradition that really did not need the football
game but did become part of the University’s
identity.9
Period 3: changes, challenges and
inertia (1963–1999)
The 1960s brought a lot of changes to the
University. Mandatory participation in the
Corps of Cadets was eliminated in 1965.
Around that time, women and minorities
were also permitted to enroll in the
University. The size of the student body and
faculty also increased dramatically. While
the Corps of Cadets continued to be the cus-
todians of the traditions, many students
enrolled in the University were now able to
participate in the traditions while others
rejected the importance and practices associ-
ated with traditions.
In 1967, the center pole was extended to
105 feet and cranes were brought in to help
with the stacking. 1968 saw one civilian
allowed to serve in a leadership role in the
Bonfire organization but the civilian had to
wear a red helmet to distinguish him from
the other Cadets. In addition, there were
some organizational structure changes that
saw a ‘Head Stack’ assume the top position,
and eight juniors were assigned to do most of
the planning and logistical work. The move
to shared custodianship was an important
concession by the Corps as enrollment in
the Corps program was no longer mandatory,
and interest and support for Bonfire was
becoming increasingly divided.
In 1969, the largest Bonfire ever (109 feet
tall) was built (Jacobs, 2002) and it was the
339
first year in which all Aggies were involved.
Non-military Aggies were organized by a
non-military student. Female students were
also encouraged to help by serving in the
first-aid tent. In 1970, a professor raised a
proposal to Student Senate to abolish Bonfire
on environmental grounds. The battle
between pro-Bonfire and anti-Bonfire groups
continued for several years. Through this
time, it was clear that the majority of students
favored Bonfire and thanks to a media blitz
related to the environment and supported by
the administration, the students eventually
won out as the call for abolishment eventu-
ally was overwhelmed. In 1973, women were
banned from working on Bonfire and in 1974
the height was limited to 74 feet.
In 1976, women were back working on
Bonfire, some serving on guard duty along-
side the males. The first female coordinator
of Bonfire appeared in 1979. Her role was to
be in charge of the women making lunches
for the men working on Bonfire as well as
those working at the Bonfire concession
stands. Although some female Cadets
attended tree-cutting classes that year, they
were not issued necessary credentials to take
part in the cutting. After a female filed a dis-
crimination lawsuit, an open debate occurred
and policy was changed. The most vehement
opponents to allowing women to participate
were the senior male Cadets involved in the
organization of Bonfire. Following the policy
change, women were allowed to participate
in the Cut but they were set up in a separate
area and were under constant supervision.
In 1981, faced with a shortage of volun-
teers (only Cadets could be forced to work on
Bonfire), a female member of ‘Off-Campus
Aggies’ and former Cadet was put in charge
of recruiting civilian women to work on
Bonfire, including the Cut (this brought
about much derision from senior Corps
members). Also in this year, the second
Bonfire death occurred when a student was
thrown from sitting on the fender of a tractor
and was crushed by the tractor, leading to a
change in policy regarding riding on tractors
and flatbed trucks.
340 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
By 1983 Bonfire decreased to only 54 feet
tall. 1998 again saw some male–female
problems as a female was dragged from
being too near the stack to outside the
perimeter. Although there was no policy
against females working the stack, the
Cadets enforced their own policy. Although a
lawsuit ensued and the Cadets pleaded guilty,
the judge did not find them guilty and took
the offenses off their records. There were
more male–female incidents in 1987 with a
lively exchange on the issue in the school
newspaper, The Battalion (Tang, 2000: 142).
In 1988, after a visit from the President’s
Office’s Sexual Harassment Committee,
women were let on the stack. There were also
several other issues that began to emerge. In
1987 police started patrolling the stack on the
eve of Bonfire for alcohol and issued many
citations and arrested six individuals. In 1988
the number of citations increased and there
were nine arrests.
In 1988, an anti-Bonfire organization,
‘Aggies Against Bonfire’ was founded
by a student and at the same time Faculty
Senate formed a committee to explore
alternatives to Bonfire. The debate between
those who pushed for alternatives and
those who wanted to keep the tradition
centered around alcohol use and, over
several years, the debate continued as well
as media campaigns to reduce the association
of alcohol and Bonfire. Environmental
issues also continued to be a focus and law-
suits were brought against Bonfire on this
ground.
In response to criticism, ‘replant’ was ini-
tiated in 1991. Replant saw hundreds of
Aggies planting 10,000 seedlings on land
that was previously cleared. Others partici-
pating in this initiative included the Texas
Environmental Action Coalition and the
A&M Forestry Club. The Environmental
Issues Chair stated that the replant, not
Bonfire, has ‘come to represent our burning
desire to beat the hell out of TU.’ These
responses were an important way of diverting
attention away from a focus on Bonfire while
at the same time serving to co-opt Bonfire
critics as they could not be against the idea of
replant (Tang, 2002).
There were very few major safety inci-
dents that happened during the remaining
years of this period. The most notable was
the leaning of the stack in 1994, again
because of excessive rain. There was another
death when students were thrown from the
back of a flatbed truck that lost control at
highway speed and there were still sexist and
racial incidents related to Bonfire organizers
and workers.
It was clear that, towards the end of this
period, there were many political, functional
and social pressures being brought to bear on
Bonfire, including a shift in both the custodi-
ans and key constituents. The first major
change had to do with the declining presence
of the Corps on campus. Enrollment in the
Corps was no longer compulsory and women
and minorities were given access to the
University, resulting in the composition of
the student body becoming increasingly
diverse. There was an increased focus on
academics and the introduction of new schol-
arly traditions such as a focus on graduate
education (Jacobs, 2002: 21). Changes in
curriculum and the University’s desire to
become one of the nation’s premier universi-
ties brought important changes to it. The
University launched an initiative called
Vision 2020 with its goal to become one of
the top 10 public universities by the year
2020. The traditions were no longer effective
in binding together the student body and, to a
large extent, were consumed more by a
minority on campus and widely consumed by
another key constituent and emerging custo-
dian, the Association of Former Students or
alumni of the University.
Thus, important changes in the University’s
internal and external environment led to polit-
ical and social pressures that eventually
changed the character, composition and
structure of Bonfire. However, critics of
Bonfire and Aggie traditions were always
actively managed by the custodians of the
University. For example, a strategy to manage
critics included an elaborate replant program
 TRADITIONS AS INSTITUTIONALIZED PRACTICE
to overcome increasing challenges from
environmentalists. The challenges and con-
tests around the legitimacy of Bonfire and
its value and appropriateness as a tradition
began to surface on a more visible and global
scale, as opposed to the more limited
challenges that previously occurred both in
terms of visibility and frequency. These
included the increasing size and diversifica-
tion of the student body, as well as changing
goals and aspirations of the University more
generally.
To summarize, during this period we can
clearly identify aspects of Bonfire that fit
onto its various antecedents and constructs in
our extended framework of deinstitutional-
ization. In terms of political pressures, we
see a reduction in the dependence on the
institutional constituents that have encour-
aged or enforced continuing procedural con-
formity with their expectations. Over the
years, the University started to depend more
on different stakeholders. Initially, the focus
was on the students and former students.
While there was a continuous focus on the
student body, the intensity of this focus
began to diminish relative to the focus on the
academic and research goals of the
University. Vision 2020 and other initiatives
clearly demonstrated the shift towards
becoming a more research-intensive, world-
class institution. Furthermore, there was a
growth in the criticality of organizational
stakeholders whose beliefs may not have
been consistent with the status quo as a result
of the shift from a local focus on students to
more global focus on institutional impact. As
result of the buildup in these pressures, the
legitimacy of institutionalized practices such
as Bonfire was being called into question.
With respect to functional pressures,
Vision 2020 and its goal to make Texas A&M
University a world-class research institution
brought about a change in the criteria for suc-
cess. The benefits of the new criteria, now
primarily dependent on outside constituents,
were neither fully understood nor widely
shared by the student constituency, who pre-
viously relied on more social criteria (i.e.,
341
quality of student life, sacredness of tradi-
tions such as Bonfire, etc.) as a basis for eval-
uating the success of the institution.
Consequently, the perceived utility of institu-
tionalized practices such as Bonfire was
slowly being subsumed by the perceived util-
ity of other practices more closely associated
with achieving the goal of becoming a world-
class research institution.
There were also social pressures that were
acting on the deinstitutionalization of
Bonfire. The new goals of the institution as a
result of vision 2020 represented a disruption
to the institution’s historical continuity. As a
result of these proposed institutional changes
there was increasing fragmentation within
the institution. One way in which this frag-
mentation manifested itself was through the
splitting of identities among stakeholders and
the conflicts that took place within the many
layers of these nested identities (Ashforth &
Johnson, 2001).
From the simple analysis above, it is clear
that several of the antecedent pressures for
the deinstitutionalization of Bonfire were
already in play during this period previous to
the time of the collapse. In addition to these
antecedent pressures, we find several entropy
pressures that were also pushing for the dein-
stitutionalization of Bonfire. These included
groups opposed to Bonfire on the basis of the
environmental damage associated with the
cutting of the trees used in Bonfire, as well as
institutional concerns about safety associated
with the size and height of Bonfire.
Also affecting the deinstitutionalization of
Bonfire were inertial pressures associated
with the long-standing institutional culture
that embodied a resistance to change and the
central role of traditions in maintaining the
culture.
While all of these pressures were mount-
ing, it became more and more clear as to
what role the custodians of Bonfire had in
counteracting the political, functional and
social pressures as well as the entropy pres-
sures. Through their reactions, the custodians
were able to manage the entropy pressures
and tip the balance in favor of the status quo.
342 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
When the Corps was the sole custodian of
Bonfire, these rituals and their associated
activities were carried out like a military
operation. As the nature of participants
evolved from the Corps of Cadets to incorpo-
rate of a greater number on non-Corps partic-
ipants, Bonfire took on a more casual and
laissez-faire atmosphere. In fact, towards the
end of this period, while Bonfire continued to
be an embodiment of the Aggie Spirit, the
processes and decision-making were more
like a party. This dilution of a core element of
Bonfire contributed to its eventual dissipa-
tion. Furthermore, the challenge faced by the
University during this period was to find
ways to simultaneously continue the momen-
tum towards strengthening its academic pro-
grams without compromising its traditions
and school spirit (Jacobs, 2002: 200).The
presence of competing traditions served to
challenge the adherence to the tradition as
well as the University’s resolve to consider
them as a defining feature of the University.
Period 4: erosion, the fall and
beyond (1999–present)
A tradition is in trouble: twelve Aggies are dead,
the campus is still in mourning, and experts are
questioning whether the Bonfire collapse was just
a freak accident. Now A&M officials must decide
whether keeping an Aggie icon is worth the risks.
(Burka, 2000: 117)
In the early morning hours of November
18, 1999, the Bonfire stack collapsed with
approximately 70 students aboard – 12 Aggies
died and 27 more were injured (Tang, 2000).
As students and other members of the
University and local community struggled to
make sense of this event, the Bonfire tragedy
drew national attention. There was a strong
call for action – How could this happen? Who
was to blame? Why was there no oversight?
Several narratives began to emerge, ranging
from calling the tradition into question to pro-
viding support for the tradition and its contin-
uation. In fact, according to a student injured
in the collapse, continuation of Bonfire would
be a way to honor those who died (Tedesco,
2000) while others noted that they would be
willing to accept small changes as concessions
as long they could keep Bonfire.
Some news stories pointed to the mysti-
cism of the accident and the students as
‘fallen heroes’ who gave their lives for the
tradition (Tang, 2000). The discourse turned
from tragedy to celebrating and memorializing
the dead.
In the days following the Bonfire, the
University distanced itself from the event by
claiming that Bonfire was a student-run
event. However, under enormous pressures
the University launched its own internal
investigation. Until this catastrophe the
University was ‘unable’ to publicly challenge
or penetrate the myth as well as the bound-
aries of the tradition. However, a catastrophe
invokes the need for action, sense-making
and reflection.
The collapse was investigated by a Special
Commission requested by the University. The
Special Commission on the 1999 Texas A&M
Bonfire concluded that the collapse was a
function of a combination of physical and
organizational factors. The physical factors
included structural stress caused by problems
with log placement and inadequate contain-
ment and binding strength. However, the
Commission squarely put the blame for the
physical deficiencies upon the organizational
factors that caused them. Cited as key organi-
zational problems were the cultural bias, the
absence of a plan, and the lack of proactive
approaches towards the management of risk
(Special Commission on the 1999 Texas
A&M Bonfire Final Report, 2000).
The University President at the time, Ray
Bowen, made a number of key decisions six
weeks after receiving the final Commission
report. First, he placed the Bonfire on hold for
two years. This led to several reactions and an
outcry from current and former students.
Concerned that a hallowed tradition will turn into
a hollow gesture, a group of students is circulating
a petition urging Texas A&M University administra-
tors to reconsider the limitations placed on future
Aggie Bonfires. (Garcia, 2000)
 TRADITIONS AS INSTITUTIONALIZED PRACTICE
Second, he set up a task force known as
Bonfire 2002 to assess the fate of Bonfire.
Bowen claimed that future Bonfire was no
longer the defining activity for the future of
the University.
On March 5, 2001, the Committee for
Bonfire 2002 posted a document out-
lining some myths and facts about the future
and past of the Bonfire tradition (source:
Bonfire 2002 Committee Homepage). The
Committee proposed key changes that sub-
stantively altered the nature of any future
Bonfire held on the Texas A&M campus.
Leadership positions were now to be selected
based on a process outlined by the recom-
mendations of a Student Leadership and
Participation Task Force committee. Future
Bonfires, while student constructed would
now have to be administered by and follow
plans prepared by licensed professional
engineers. Previously, the Cut and Stack
phase lasted over two months. Now, the
core ritual of Cut was eliminated from all
future Bonfires with a recommendation that
logs would now be cut and delivered by a
professional firm.
Further, the construction core ritual of
Stack was to be limited to a total of two
weeks. The site would now be fenced in and
monitored by video cameras (Brown, 2000).
Bonfire participants would now have to
undergo training certification in preparation
with any roles associated with planning and
construction. Interestingly, one of the notions
the Committee sought to dispel was the myth
that Bonfire as a tradition had remained
invariant over time. The Committee provided
key facts about the extent to which there
was variation in ancillary elements such as
the structure and length of time involved in
construction.
In 2002, Bowen announced that there
would no longer be a Bonfire burned on
the Texas A&M campus. In order not to
challenge the essence of Bonfire, the
University proposed a new tradition, a
Bonfire Memorial and went to great lengths
to promote and develop this project of re-
invention. The fallen would now be honored
343
with an everlasting memorial flame and
Bonfire is still listed as a core tradition of the
University on its website. So, while several
core and ancillary elements were removed
the University successfully reinvented the
tradition.
The remnants in terms of collective mem-
ories drove the re-emergence of the tradition
in a new place. The tradition migrated off
campus and former students became even
more fervent custodians providing resources,
land, and cash to support its re-emergence.
Groups such as the ‘Bonfire Coalition’ and
‘KTBF – Keep the Fire Burning’ emerged to
revive, protect and preserve the tradition. As
recently as 2004, Bonfire burned off-campus
and it was claimed that over 10,000 individ-
uals turned out to watch it burn (Nauman,
2004). Thus, the tradition took on a life of its
own and was no longer embedded in the con-
text or place in which it was once created.
Our analysis of the previous period of
Bonfire through the lens of the extended
deinstitutionalization framework clearly sug-
gests that several antecedent and direct pres-
sures for dissipation existed prior to the fall.
However, these pressures were being strate-
gically kept in balance by the custodians
through various types of reactions that were
aimed at preserving and further entrenching
the tradition of Bonfire.
The events of 1999 were horrific, yet they
did not serve to distract the custodians (those
who worked on the stack) from their goal of
maintaining the tradition. Their reactions
were consistent with previous periods and
they fought hard to counterbalance the grow-
ing political, functional and social pressures
as well as the pressure for entropy. In
essence, their actions were aimed at main-
taining the dominance of inertia over entropy
that they managed over the previous years of
Bonfire. However, in this case, it was clear
that entropy gained the upper hand. As a
result of the crisis, the reactions of the
University were able to overcome the
entropy. The University reacted in a number
of ways. They disembedded and dismantled
the core elements of the tradition by no
344 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
longer allowing for Cut (the logs being
delivered), and the Bonfire was now to be
supervised and monitored, eliminating
opportunities for ‘groding’ and other forms
of hazing. The University recommended a
further dilution of custodianship in that they
would now run and largely control the tradi-
tion. In sum, the University’s decisions sig-
nificantly altered the value of the ‘inherited
resource’ for the custodians of the tradition
while not directly challenging the myth of
Bonfire. Bonfire was now to be over-
engineered, costly, over-monitored and unin-
teresting. It was now diluted to the point that
it ceased to have value for its custodians.
In 2002, when Bowen announced that
Bonfire would no longer be held on campus,
he erased the core element of place for the
rituals of Stack and Burn and this directly
affected dissipation and erosion of the tradi-
tion. The crisis allowed the University to
penetrate the boundaries of the tradition.
Bonfire was no longer needed to tell the new
narrative about the University. This raises
interesting future questions about the role of
place and migration in the process of deinsti-
tutionalization as well as the assimilation of
an older element into a newly re-invented tra-
dition. Our observations regarding this
period also raise a number of questions
regarding the interplay of challenges and
mechanisms for dissipation. All at once, a
number of mechanisms (assimilation, dilu-
tion, disembedding, competition, and era-
sure) were simultaneously in play, making it
increasingly difficult for the custodians to
counter forces for entropy impacting dissipa-
tion. Thus, the custodians could not deal with
everything at once – if challenges or threats
to core elements are sequenced or separated
over time, then custodians have time to for-
mulate strategies to combat entropy.
We summarize our discussion above in
Table 12.1.
Table 12.1 charts the evolution of Bonfire
over the four periods described above and
provides a summary of changes over time. It
tracks the essence, custodians, rituals and
physical artifacts, as well as changes in place
and temporality. Table 12.1 also provides
insights into the changing nature of the
organization in which the tradition was
embedded by summarizing the character of
the organization, its key constituents, key
success factors, and strategic arenas.
FROM EROSION OF TRADITION
TO UNDERSTANDING
DEINSTITUTIONALIZATION
As Shils notes, ‘there is a great need in the
world for a better understanding of the
nature of tradition and for a better apprecia-
tion of its value’ (1981: vii). We examine the
potential contributions of the findings of our
case study for the study of traditions and illu-
minate a number of insights for understand-
ing deinstitutionalization. We do this through
mapping case insights onto our extended
framework based on Oliver’s (1992) frame-
work for deinstitutionalization and propose
several extensions of her process model of
deinstitutionalization.
Given Oliver’s framework, we can clearly
identify aspects of Bonfire that map onto
its various antecedents and constructs. In
terms of political pressures, we see a
reduction in the dependence on the institu-
tional constituents that have encouraged
or enforced continuing procedural conform-
ity with their expectations. Over the years,
the University started to depend more on
different stakeholders. Initially, the focus
was on the students and former students.
While there was a continuous focus
on the student body, the intensity of this
focus began to diminish relative to the
focus on the academic and research goals
of the University. Vision 2020 and other
initiatives clearly demonstrated the shift
towards becoming a more research-intensive,
world-class institution. Furthermore, there
was a growth in the criticality of organiza-
tional stakeholders, whose beliefs may not
have been consistent with the status quo
as a result of the shift from a local focus on
 TRADITIONS AS INSTITUTIONALIZED PRACTICE 345

Table 12.1 The evolution of bonfire: 1909–present

Dimension 1909–42 1942–65 1965–99 Post-Fall
University focus Total Institution Inward Inward/Outward Outward
More academic Mainstream
Vision 2020
Culture and Military Focus Stronger military Sub-cultures present Old Culture is liability
core beliefs ‘Hazing’ common focus promoted Multiple identities New culture focused
differences exist on academics and
Emphasis on the Focus on academics becoming a top
‘Other’ and research public university
Education
Organization – Tightly coupled Tradition is the Last 20 years saw Tradition is: Questioned,
Tradition Link values Institution shift to somewhat unwanted
decoupling yet tightly coupled
Physical Trash and wood Logs (donated) Logs (fresh cut) Two year hold on campus
composition Stolen materials Tepee style design Layered cake design Flame on campus
Disorganized pile 45-100 ft 110 ft Off-campus:
design 20 ft Logs (fresh cut)
Layered cake design
Custodians Cadets Corps Shared custodianship: University
Commandant Cadets plus non- Former students
cadets Non-cadets
Cadets
Rituals Play Cut, Stack, Burn Cut, Stack, Burn Memorial service
Cut, Stack, Burn (Offsite)
Place On campus On campus On campus Off campus
Re-invented on campus
Time Before ‘big game’ Before ‘big game’ Before ‘big game’ Cancelled on campus
Once burned after Off-campus: Before
‘big game’
Arenas and State Politics Football rivalry Public funding Survival
contests Funding Enrollments Relative status
Key success Football Football Increasing enrollment World-class ranking
factors Traditions
Audience and State, Local Students, Local National, Public Global
constituents

students to a more global focus on institu-
tional impact. As a result of the buildup in
these pressures, the legitimacy of institution-
alized practices such as Bonfire was being
called into question.
With respect to functional pressures,
Vision 2020 and its goal to make Texas A&M
University a world-class research institution
brought about a change in the criteria for
success. The benefits of the new criteria, now
primarily dependent on outside constituents,
were neither fully understood nor widely
shared by the student constituency who
previously relied on more social criteria
(i.e., quality of student life, sacredness of
traditions such as Bonfire, etc.) as a basis for
evaluating the success of the institution.
Consequently, the perceived utility of institu-
tionalized practices such as Bonfire was
slowly being subsumed by the perceived util-
ity of other practices more closely associated
with achieving the goal of becoming a world-
class research institution.
There were also social pressures that
were acting on the deinstitutionalization of
Bonfire. The new goals of the institution as a
result of Vision 2020 represented a disruption
to the continuity of the institution’s historical
identity. As a result of these proposed institu-
tional changes and refocus on academic
excellence as a research institution, there
was increasing fragmentation among the
346 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
institution’s stakeholders. This fragmentation
manifested itself through the splitting of
identities among stakeholders and the con-
flicts that took place within the many layers
of institutional identity
From the analysis above, several of the
antecedent pressures for the deinstitutional-
ization of Bonfire were already in play at the
time of the collapse in addition to the pres-
ence of several pressures for entropy pushing
for the deinstitutionalization of Bonfire.
These included groups opposed to Bonfire on
the basis of the environmental concerns as
well as institutional concerns about safety
associated with the size and height of
Bonfire.
Also affecting the deinstitutionalization of
Bonfire were pressures to maintain status
quo associated with a culture that resisted
change and nurtured the central role of tradi-
tions in maintaining the culture.
Our observations about Bonfire also help
us to illustrate how the elements we intro-
duced into the extended deinstitutionaliza-
tion framework provide additional insight
and allow us to capture other important
dynamics that appear to be involved in
deinstitutionalization. It was our belief,
based on our integration of several streams of
research, that whether deinstitutionalization
represents dissipation or outright rejection is
a function of whether the core or ancillary
elements of an institution are affected by sev-
eral mechanisms. In this chapter, we have
described those mechanisms and used the
case of Bonfire to consider the multiple
mechanisms by which dissipation occurs.
Focusing on the mechanism of competition
has allowed us to better understand the
nature of institutional collisions as compet-
ing traditions lead to greater pressures to
demonstrate legitimacy as well as functional
utility.
These mechanisms or strategies include,
among others, dilution, disembedding, and
buffering or decoupling. By dilution, we
mean that the organization ensures there
are new institutionalized practices added
into the mix or that multiple institutionalized
practices are invented in the beginning so
that the reliance on any one of these practices
is minimal. Another strategy is one in which
the institutionalized practice is disembedded
from either ancillary institutions that exist or
from other interconnected elements of the
organization. Buffering or decoupling refers
to the distancing of the organization and the
institutionalized practice either cognitively
or in its narratives by telling a different
story about the meaning of the institutional-
ized practice. Distancing could also occur in
the sense of abdicating responsibility for the
tradition.
Beyond our initial extensions to the dein-
stitutionalization framework based on our
integration of several literature streams, our
analysis of the Texas A&M Aggie Bonfire
case suggests further important extensions.
First, the analysis leads us to believe that it is
important to extend the framework to explic-
itly recognize the role of custodians of insti-
tutionalized practices. In our examples based
on Bonfire, we demonstrate that custodians
of institutionalized practices can serve as a
critical counterforce to entropy. In essence,
custodians balance the pressures for entropy
and sustain institutionalized practices. The
Corps of Cadets or ‘Keepers of the Spirit’
(Adams, 2001) did much to take a tradition
borne out of humble beginnings and make it
the center-piece of the traditions at the
University. As the tradition faced detractors,
the Corps sought to protect the tradition and
guard against potential dissipation. They did
this by limiting access to and knowledge
about the construction of Bonfire. The infor-
mal hierarchy of Bonfire kept participation in
the core rituals small and elite while partici-
pation in the performance aspects of the tra-
dition was much broader. The custodians also
countered forces for entropy by providing
innovative solutions to critics (such as the
response of ‘replant’ to environmental criti-
cisms) versus going on strike as they did in
Period 2 as well as calling on former custodi-
ans and other key constituents for support as
needed (former students, parents, members
of the University Administration).
 TRADITIONS AS INSTITUTIONALIZED PRACTICE
Second, through our analysis of Bonfire,
we suggest that the framework should explic-
itly recognize the role of crises which allow
for permeability in the boundary and provide
for windows of opportunity to extinguish lia-
bilities and overcome inertial tendencies.
Until the fall of the stack in 1999, changes to
the core elements of Bonfire were always
resisted; critics were managed and when the
numbers and power of the Corps began to
decline in the third period, concessions were
made to share custodianship so as to keep the
core rituals, collective memories and other
core elements intact.
Third, from our Bonfire analysis, we also
believe that whether deinstitutionalization
represents dissipation or outright rejection is
a function of whether the core or ancillary
elements of an institution are affected by sev-
eral strategies that directly impact dissipa-
tion. From our analysis we observe that core
elements of a tradition also evolve over time
but, once in place, they tend to be more or
less stable and enduring than peripheral or
ancillary elements. Consequently, this sug-
gests that there are both ancillary and core
elements that may experience dissipation as a
result of political, functional and social pres-
sures. While our case study does not allow us
to establish the relative effectiveness and out-
come of bringing political, functional and
social pressures to bear on the core and ancil-
lary elements, it may be that the core are
more resistant to these pressures, requiring
crises as a way of breaking down the resist-
ance, and that pressures on specific ancillary
elements may lead to the erosion of those
specific elements but may not erode, and
in fact may serve to strengthen, the core
elements.
Fourth, the case of Bonfire clearly illus-
trates that a tradition or institutionalized
practice can be re-invented or reconstructed,
just as Bonfire migrated off-campus. So, it
was re-invented in its original location in the
form of a memorial flame and re-incarnated
in a new location.
By unveiling and focusing on the process
of re-invention we highlight the importance
347
of institutional remnants. Mohr (2006) refers
to these ‘bits’ of institutions as institutional
litter. Remnants can be useful for construct-
ing new traditions, re-inventing old traditions
(Hobsbawm & Ranger, 1984; Shils, 1981) or
for the re-emergence of institutionalized
practices experiencing dormancy (Mohr,
2006; Tucker, 2006; Zerubavel, 1995).
Remnants can take the form of stories, phys-
ical objects, rituals, temporal connections or
linkages to place as well as take the form of
sentiments and memories. We propose that to
the extent remnants of institutionalized prac-
tices remain in place, they are also able to
prevent extinction. Therefore, it is rare for us
to observe the complete extinction or eradi-
cation of deep-rooted traditions or institu-
tionalized practices.
Finally, in this chapter, we demonstrate
that traditions do not always arise as a result
of institutionalization projects or purposeful
action. Rather, they can emerge from humble
beginnings or arise out of serendipity.
However, we also demonstrate that the
processes of re-invention, re-incarnation or
re-emergence may potentially require the
focused attention of custodians or institu-
tional entrepreneurs (current and/or future).
In summary, the key extensions to Oliver’s
(1992) framework introduced in this chapter
include the clarification of various reactions
to the political, functional and social pres-
sures, the unpacking of dissipation, the mod-
erating roles of custodians and crises on
entropy and inertia respectively, and the
notion of institutional remnants. The
extended framework for deinstitutionaliza-
tion appears in Figure 12.2.
DIRECTIONS FOR FUTURE RESEARCH
Oliver’s (1992) framework for deinstitution-
alization brought clarification to an impor-
tant concept that has entered the everyday
parlance of the institutional theorist through
numerous journal articles, book chapters
and everyday discussions. However, as
348 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Political Custodians
pressure
Dissipation or
Reactions rejection
Functional Correction
pressure Decoupling
Mobilization
Social
pressure
Crisis
Figure 12.2 An extended deinstitutionalization framework
we note, institutionalized practices are com-
monly slow to become extinguished.
Elements of these practices also often con-
tinue in residual forms that serve as
reminders of prior strategies and/or as raw
material for the construction of new ones.
Through our integration of various theoreti-
cal approaches, we believe our extended
framework explicates important aspects that
help us further understand the deinstitution-
alization process in the context of a long-
standing tradition.
We also believe that our extended frame-
work provides a basis for continuing the
important discourse about deinstitutionaliza-
tion that has emerged since Oliver’s seminal
work on the topic almost fifteen years ago.
Continuation of this discourse is important
because many aspects of the deinstitutional-
ization process have yet to be understood.
Following, we present several areas for
research that emerge out of the work pre-
sented in this chapter. We encourage
researchers to pursue any of these future
directions.
One promising area for future research
would be to examine other key mechanisms
leading to dissipation. In this chapter we
focus on some of the key mechanisms
(assimilation, competition, dilution, disem-
bedding, and erasure) but it is likely that
Entropy
Assimilation Deinstitution- Erosion or
Competition alizaton extinction
Dilution
Disembedding
Erasure Institutional remnants
Construction of New
Institution
Re-invention
Re-emergence
Inertia
there are other mechanisms worthy of
inquiry. Two mechanisms that might be
investigated further in future research include
displacement and migration. Displacement
occurs when exogenous forces such as
changes in technology or the emergence of
new knowledge or circumstances result in the
tradition being discarded or rejected (Shils,
1981: 258). Migration, according to Shils
(1981), occurs when a tradition is transported
to a new context where it may have a new or
different meaning or become completely
irrelevant. An example of this would be wine
tasting in a culture where it is forbidden to
consume alcohol. In this case, the adherence
to the tradition and associated rituals of wine
tasting would be largely determined by the
receptivity of the recipients. DiMaggio
(1988) also discusses institutional migration
and local modifications that result from vari-
ation in interests and power.
In addition to investigating mechanisms
that promote dissipation, it would also
be worthwhile to consider various mecha-
nisms that serve to prevent dissipation and
eventual deinstitutionalization. This would
provide further insights into the strategic
management of institutionalized practices.
In this chapter we only highlighted a
few such mechanisms that became apparent
to us through our case study of Bonfire
 TRADITIONS AS INSTITUTIONALIZED PRACTICE
but we encourage researchers to introduce
other mechanisms of this type to the
literature.
Our analysis of Bonfire led us to identify a
distinction between core and ancillary ele-
ments (for example, rituals) of a tradition.
While this distinction provided important
insights related to the erosion of institution-
alized practices such as traditions, we believe
that further investigation into a related area
for future research is one that focuses on the
dimensionality of institutions and the extent
to which erosion of one or more core ele-
ments results in variable intensity of erosion
in terms of both scope and potency. Issues to
examine when pursuing this research include
whether there are thresholds at which decline
is more rapid or slow, and whether there are
specific patterns or configurations of core
and ancillary elements that once combined
increase or decrease the propensity of
decline. At a field level, DiMaggio distin-
guishes between core and subsidiary institu-
tions and states ‘under many conditions, the
interests of these legitimated, partially
autonomous, subsidiary institutions diverge
from those of the governors of the core insti-
tutional form’ (1988: 16). Adopting this
to our work, the issue becomes one of under-
standing how taking over or controlling
ancillary elements but not the core elements
allows one to launch delegitimating attacks
on the core or demand changes in the
core. We suggest that much more work needs
to be done to fully understand the nature,
dynamics, and interaction of core and ancil-
lary elements.
The notion of an ‘institutional remnant’
is an important one in the extended frame-
work. We argue that extinction is an ultimate
yet relatively rare event in deinstitutionaliza-
tion and that the remnants of traditions
often become instrumental in the construc-
tion of new institutional practices or the
re-invention or re-emergence of what may
have been considered an eroded or extinct
institutional practice. In this light, an area for
future research would be to examine the
role of collective memories more fully in
349
constructing as well as eradicating institu-
tionalized practices. In our case, the tradition
of Bonfire took place in an intergenerational
organization. By placing the Bonfire on hold
for two years the University essentially pre-
vented the core elements of the tradition
from being experienced or shared by
Freshmen who entered the year of the Fall.
Thus, these newcomers did not have shared
experiences with which to create ‘communi-
tas’ (Turner, 1969) or new collective memo-
ries, yet the institutional remnants of Bonfire
led to its re-emergence as an off-campus
event. Future research could examine
whether patterns of enhancement and erasure
are similar in other contexts. For example,
intergenerational organizations such as the
military or the field of consulting might also
attempt to construct or eradicate institutional
practices.
With respect to core and ancillary ele-
ments associated with a tradition, a fruitful
area for future research would be to investi-
gate the relative role of these elements in the
deinstitutionalization process. We speculated
that core and ancillary elements differ in
their relative resistance to erosion but,
because we present only a single case study,
we could not further investigate this insight.
One way of pursuing this phenomenon
would be to consider whether there is a
hierarchy of core and ancillary elements.
For example, with respect to core elements,
one could examine whether there is a
hierarchy or ordering of core elements or
whether the core elements are themselves
interconnected in some meaningful way such
that interactions among these elements serve
to produce interactions, and crowd out or dis-
place one another. Following this line of
thought, interesting questions include:
whether one can remove one core element
but still have the institutionalized practice
survive; or the extent to which core elements
would have to be removed to erode the
institution.
Finally, while our focus in the current
chapter is on institutionalized practices, it
would also be important to understand how
350 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
institutions change. Institutional theorists
note the permanence or stability of institu-
tions but it could be that our belief about
invariance is merely an illusion that is
socially constructed. In other words, do we
make sense of institutional effects by fitting
them into the expectations of what we ‘want’
to experience, or do we consider them invari-
ant because once in place, both violations
and sanctions are rare, unobservable, or
inconsequential? These are questions that
need to be addressed by scholars interested in
furthering their understanding of processes
of institutional emergence, change, and
extinction.
ACKNOWLEDGMENT
We acknowledge the support of the Social
Sciences and Humanities Research Council
of Canada. Special thanks to N. Anand, Terry
Beckman, Robert David, Jim Denford, Rudy
Durand, Renate Meyer, Willie Ocasio and
Hayagreeva Rao for their helpful comments
and encouragement in the developmental
stages of this work. Thanks also to workshop
participants at the 3rd annual Davis
Conference for Qualitative Research, as well
as seminar participants at Bocconi, HEC,
Erasmus, Insead, Northwestern, London
Business School, McGill, Queen’s and York
Universities.
Figure 12.1 reprinted from C. Oliver, 1992
‘The antecedents of deinstitutionalization’,
Organization Studies, 13, 563–588, with
permission from the author and Sage.
NOTES
1 A remnant is a ‘small remaining quantity’ and/or
a ‘surviving trace/vestige’ of something that once
existed (Oxford University Dictionary).
2 Sapir (1949) makes a distinction between culture
that is genuine versus spurious. Spurious culture is
often devoid of meaning and is externally con-
structed and controlled. On the other hand, genuine
culture is internally generated, harmonious and
authentic.
3 The remnants transmitted across generations
may be large enough so that no significant change in
the tradition is perceived by its adherents.
4 While we draw upon and further develop the
idea of custodians from Soares (1997), DeJordy and
Jones (2006) have recently used the term ‘institu-
tional guardians’ in their work on the changing
meaning of marriage.
5 In several passages, Shils (1981) uses the terms
traditions and institutions synonymously.
6 The web page of the University provides great
detail about the nature of Texas A&M University
traditions.
7 In particular, we draw upon the rich and
thoughtful historical case study of Bonfire by
journalist Irwin Tang, 2000.
8 In 1966, as an acknowledgement to the war in
Vietnam, thousands of gallons of Napalm were
poured on Bonfire to assist in its lighting.
9 Texas A&M had declining football performance
for much of Period 2 and the early part of Period 3.
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New Forms as Settlements
Hayagreeva Rao and Martin Kenney
INTRODUCTION
A challenge facing neo-institutionalism is to
detail how pre-existing institutional condi-
tions and alternative institutional projects
influence the creation of new organizational
forms. We build on the idea that varying
degrees of contention underlie the construc-
tion of new forms, and suggest that a settle-
ment or truce has to occur among contending
parties for the new organizational form to
gain a foothold. We develop a model of how
asymmetries of power among the contestants
and incompatibility among their proposals
shape the nature of the settlement, and its
durability. We discuss when asymmetries of
power among contestants are high or low,
and when ideological compatibility among
the proposals is high or low, and present a
matrix of possible settlements. We illustrate
the framework by drawing on examples and
discuss implications for institutional theory
and organizational ecology.
The institutional perspective proposes that
new organizational forms arise when actors
with sufficient resources see in them an
opportunity to realize interests that they
value highly, but first they must legitimate
the theory and values underpinning the form
13
(DiMaggio, 1988: 18). In this perspective,
institutional projects can arise from organ-
ized politics or social movements, and in the
case of the former they resemble the latter to
the extent that resources and interests are not
fixed and the rules governing interaction are
contested (Fligstein, 2001). A few studies
have shown when and how new organiza-
tional forms and industries are spawned by
social movements and entail varying degrees
of contention (Davis and McAdam, 2000;
Rao, Morill and Zald, 2000; McAdam and
Scott, 2005).
Recently, organizational ecologists have
suggested that an organizational form is a
taken-for-granted category with default con-
ditions that define membership such that vio-
lation of these conditions is penalized by
audiences (Hannan, Pólos, and Carroll,
2007). Thus, an organizational form is an
externally enforced identity composed of
diagnostic elements and the expected (and
thus, rewarded) values on these elements
(Pólos, Hannan, and Carroll, 2002). These
diagnostic elements cohere to form a code of
conduct which is enforced by consumers,
critics and other audiences.
So a challenge is to reconcile the political
process by which organizational forms are
 NEW FORMS AS SETTLEMENTS
constructed with their existence as socially
coded identities. Put another way, how
does conflict and contestation culminate
in a code? Therein, lies the motivation for
our chapter. We propose that forms have to
be first constituted as settlements – that is
agreements have to be negotiated among par-
ties before new forms can be institutionalized
as codes. A settlement is a set of understand-
ings and expectations about a form that are
shared among internal and external audi-
ences. Settlements become codes only when
these understandings and expectations
become default conditions of membership,
and are enforced by external and internal
audiences.
We visualize a process wherein coalitions
of institutional entrepreneurs champion
proposals, that is intended projects that
concretize the strategic intent, vision, and
goals of the promoters. When different
coalitions promote competing proposals, the
construction of a settlement becomes a
political process in which asymmetries in
the power of the various coalitions become
critical. In particular, the size of the coalition,
its ability to mobilize additional resources,
and its power to frame become decisive.
We develop a model of how asymmetries
of power among the contestants and incom-
patibility among their proposals shape
the nature of the settlement, and argue
that settlements become institutionalized
into codes of conduct with varying levels of
durability and enforceability. We discuss
when asymmetries of power among contest-
ants are high or low, and when ideological
compatibility among the proposals is high
or low, and present a matrix of possible
settlements.
We suggest that settlements have diffe-
rent levels of durability and enforceability
as these two parameters vary. New forms
do not move from conflict to settlement to
code in two distinct leaps – instead, the
process is more incremental and gradual.
In this sense, conflict and code are two
ends of a continuum with the settlement as
an intervening precondition for the emergence
353
of a code. We illustrate our classificatory
endeavor with four distinct cases that illumi-
nate the four alternative settlements repre-
sented by our framework.
NEW FORMS AS SETTLEMENTS
Stinchcombe (1968: 194) asserts that the entre-
preneurial creation of new forms ‘is pre-
eminently a political phenomenon’ because
support has to be mobilized for the goals,
authority structure, technology, and clients
embodied in the new form. In some cases,
resource spaces unoccupied by other forms
may exist, or, at least, have the potential to be
created, but the existence of such unfilled
resource spaces does not mean that the
resources are ‘free floating’ and thus easily
available to potential entrepreneurs. Rather,
entrepreneurs have to assemble resources,
legitimate the new form, and integrate it with
the prevalent institutional order. In other
cases, resource spaces for a new form may
not exist, and entrepreneurs have to construct
these spaces by defining opportunity, identi-
fying distinctive resources, and prying them
away from existing uses. Since entrepreneurs
are trying to convince others to go along with
their view, the formation of new industries
and forms resembles social movements
(Fligstein, 2001).
Social movement theorists propose that
institutional entrepreneurs can mobilize
legitimacy, finances, and personnel through
the use of frames (McAdam, McCarthy, and
Zald, 1996). Frames define the grievances
and interests of aggrieved constituencies,
diagnose causes, assign blame, provide solu-
tions, and enable collective attribution
processes to operate (Snow and Benford,
1992: 150). Thus, frames are theories that jus-
tify an organizational form – an incarnation
of goals, authority, technology, and clients,
as indispensable, valid, and appropriate. In
‘much the same way that pictures are framed,
questions and actions are framed, and the con-
text in which they are viewed and discussed
354 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
determines what gets done º Setting the
context is a critical strategy for exercising
power and influence’ (Pfeffer, 1992: 202). In
our case the framers are constructing a vision
of the future.
Institutional entrepreneurs create frames by
selecting items from a pre-existing cul-
tural menu (Meyer and Rowan, 1977: 345;
DiMaggio and Powell, 1983). Swidler (1986:
277) suggests that a culture is not a ‘unified
system that pushes action in a consistent
direction. Rather it is more of a “tool kit”
or a repertoire from which actors select
differing pieces for constructing lines of
action.’ Douglas (1986) points out that
bricolage is an important method by which
entrepreneurs construct new cognitive models
and formal structures. Thus, entrepreneurs
can recombine elements from existing
repertoires through imitation, or consciously
revise existing models on the basis of
their training in other organizations. An under-
current of these studies is that there are a
number of alternative institutional projects
that are proposed in a given situation and
projects win out by a political process
and constitute an institutional settlement
(DiMaggio, 1991).
MULTIPLE FRAMES AND CONFLICT:
THE INSTITUTIONAL VIEW
Politics becomes obtrusive when an unfilled
resource space ‘calls forth and permits a
range of definitions of the situation’ (Zald
and McCarthy, 1980: 6), and when rival
coalitions of issue entrepreneurs champion
incompatible frames. Even as entrepreneurs
may draw on a generalized Western cultural
account (Meyer, Boli, and Thomas, 1987)
and justify their actions on the basis of the
widely-accepted myths of progress and jus-
tice, there is a wide scope for conflict over
the practical implications of the Western cul-
tural account in the construction of new
organizational forms. In one of our four
cases, fundamental ‘American’ values of the
independent businessperson and intrepid
entrepreneurs clash with the ideology of
governmental non-interference in the mar-
ketplace. In yet another of our cases, the
contradictory French cultural values devolv-
ing around tradition and progress provide
the fuel for contestation in the world of
gastronomy. Rather than a clash of tectonic
plates, we have long-running skirmishes
where the frames presented suffer from
inconsistencies and difficulties. Which frame
and its organizational embodiment should
be chosen to define and organize an activity
is a political question. Friedland and Alford
(1991: 240–242), capturing the swirling
nature of this creative process, propose
that the creation of new organizational
forms unfolds at three levels of analysis,
with ‘individuals competing and negotia-
ting, organizations in conflict and coordina-
tion, and institutions in contradiction and
interdependency º’ We conceive of these
levels of analysis as ‘nested,’ where organiza-
tion and institution specify higher levels of
constraint and opportunity for individual
action.
When multiple frames and forms vie
with each other, why one form is chosen and
why other roads are not pursued hinges on
larger constellations of power and social
structure (Brint and Karabel, 1991: 346). In
cases where the criteria for a good technical
solution are contested, political and institu-
tional processes shape not only what organi-
zations can do, but which organizational
form can exist (Powell, 1991: 186–187).
Thus, the scope of the form, that is the goals,
authority structure, technology and clients
embodied in the form, are outcomes of
contending attempts at control and compet-
ing quests to impose a preferred definition
of the identity of the constituencies that
benefit from the form. Struggles to produce
new meanings and new social structures
are, therefore, motors of social change in
societies and these tussles unfold in an orga-
nizational field where the state and the pro-
fessions play an important role (DiMaggio
and Powell, 1983).
 NEW FORMS AS SETTLEMENTS
Organizational forms as codes:
the ecological view
As noted earlier, organizational ecologists
define an organizational form as an exter-
nally enforced identity composed of diagnos-
tic elements and the expected (and thus
rewarded) values on these elements (Pólos,
Hannan, and Carroll, 2002; Hannan, Pólos,
and Carroll, 2007). Two features of this defi-
nition are noteworthy. First, by requiring
organizational forms to be collective identi-
ties in the eyes of audience members, it lets
the organizational form be defined in society
independently of any specific instance of it.
Second, audience members examine only
diagnostic elements, and ignore cultural ele-
ments that are common across organizational
forms and so do not identify them as distinct
categories. Hence the existence of common
organizational elements such as shared insti-
tutions does not disprove form distinctive-
ness, it just means that distinctiveness has to
be found elsewhere.
The ecological view of organizational
forms as identities that need to conform to
social codes not only emphasizes distinctive-
ness but also highlights consistency. Some
studies contend that organizations which
seek to straddle multiple categories suffer
from inconsistent identities and code con-
flicts. Carroll and Swaminathan (2000)
showed that since craft brewers were deemed
to be authentic when they were small and
used traditional artisanal techniques, contract
breweries that sourced beer from others but
sought to portray themselves as craft beers
could not mobilize support from consumers,
and so had lower founding rates than micro-
brewers and brewpubs. Zuckerman and Kim
(2003) demonstrated that films classified as
major films fared well in the mainstream
market but floundered in the art-house
market, and Zuckerman, Kim, Ukanwa, and
von Rittman (2003) showed that movie
actors who focused on a single genre were
more likely to get work in the same genre.
However, Rao, Monin and Durand (2005)
found that the boundaries between classical
355
and nouvelle cuisine weakened as high-status
chefs in one category borrowed techniques
from the rival category, and that attendant
penalties from critics also diminished as
borrowing became rampant.
The architecture of settlements
Thus, if institutional researchers place
importance on conflict as antecedent to the
construction of organizational forms, and
organizational ecologists stress consensus
which takes on a code-like character as the
precondition for organizational forms, how
can these seemingly opposed viewpoints of
institutionalists and ecologists be reconciled?
We take a first step and suggest that institu-
tionalists and organizational ecologists focus
on different sub-processes in the creation of
organizational forms: the early sub-process
of conflict is followed by the second sub-
process, namely, the construction of settle-
ments, and then the final phase of
codification.
In short, we propose that organizational
forms first have to be constructed as settle-
ments, and then institutionalized as codes.
New organizational forms do not move from
conflict to settlement to code in two giant
leaps – instead, the process is gradual and
incremental. One also ought not to think of
institutionalization as an on-off mechanism;
instead, it makes more sense to think of new
forms as being institutionalized, and existing
forms also being de-institutionalized (Oliver,
1992). So institutionalization advances and
recedes, and increases and decreases over
time. Conflict triggers the de-institutionaliza-
tion of existing forms and is precursor to insti-
tutionalization of new organizational forms.
The institutionalization of organizational
forms is not an all-or-nothing proposition;
instead, organizational forms, like other social
patterns, can be more or less institutionalized
(Tolbert and Zucker, 1996; Zucker, 1988).
Our starting point is Nelson and Winter’s
(1982: 109–111) proposal that intra-
organizational routines become operative
356 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
only when there is a comprehensive truce or
settlement, or when there is a cessation of
conflict among members of an organization.
Following Rao (1998), we contend that
boundaries of a new organizational form
become established and the new form
becomes integrated into a community of
organizations only when there is a truce
among the constituents of the organizational
field about which frame is used to organize
activities. Like settlements among nations,
settlements among rival institutional entre-
preneurs can also be unequal, with some able
to capture a privileged position for their
frame, which allows them a larger share of
any benefits derived from the settlement.
Settlements increase the capacity for col-
lective action by reducing comprehensiveness;
often some points of view are ignored or sup-
pressed. The terms of a settlement among rival
institutional entrepreneurs can never be com-
pletely explicit, thus the maintenance of settle-
ments depends upon the disincentives for
actors for engaging in provocative actions and
Table 13. 1: Settlement Types and Codification
Ideological Compatibility of Proposals
Low
Quadrant One
“Something for Everyone”
Low Example: Small Business
Investment Corporations
Prognosis: Brittle, low
likelihood of evolving
Asymmetry
of Power
Quadrant Three
“Imposition by Dominant
Actor”
Example: Consumer
High watchdog groups
Prognosis: Durable as long as
dominant form backers retain
power, medium likelihood of
codification
the monitoring defensive alertness of parties
keen on preserving the status quo. As a result,
just like intra-organizational routines, organi-
zational forms are ‘confined to extremely
narrow channels by the dikes of vested inter-
est. Adaptations that appear “obvious” and
“easy” to an external observer may be fore-
closed because they involve a perceived threat
to the º political equilibrium’ (Nelson and
Winter, 1982: 111). These dikes are the con-
struction, conscious and, sometimes, uncon-
scious of the beneficiaries of the settlement.
The proposals championed by contestants
can be thought of as Simonian sub-assem-
blies that vary in terms of their ideological
compatibility. The relationships among con-
testants may be asymmetric if one or a few
of them has greater power due to their size,
their ability to mobilize resources from
constituencies and allies, and framing skills.
Below, we outline the matrix of possibilities
and concomitant examples in Table 13.1.
Table 13.1 suggests that when all the par-
ties interested in solving a problem champion
High
Quadrant Two
“Patchwork of Different Flavors”
Example: French cuisine
Prognosis: Evolving, uneven
codification
Quadrant Four
“Integration”
Example: California thrifts
Prognosis: Extremely durable,
high likelihood of codification
 NEW FORMS AS SETTLEMENTS
incompatible proposals and none of them is
powerful enough, the resulting settlement is a
negotiated outcome that is fragile and likely
to be breached (Cell 1). Indeed, one can even
think of the settlement being de-institutional-
ized. A compelling example was the creation
of small business industry corporations
(SBICs) in America. By contrast, when the
parties champion compatible proposals and
none of them is decisively powerful, then the
resulting settlement may be characterized as
the pooling of these sub-assemblies (Cell 2).
The resulting patchwork of a settlement is
also fragile because parties may be jostling to
appropriate benefits at the expense of other
parties. Here again, settlements can be de-
institutionalized. We draw on Rao, Monin
and Durand (2003, 2005) to chronicle how
classical and nouvelle cuisine, which were
initially opposed to each other became com-
patible, and given that no one coalition was
dominant, chefs began to blend classical and
nouvelle cuisine. In Cell 3, the settlement is
the outcome of imposition because there is
asymmetric distribution of power, and one of
the parties can impose their proposal on the
others. We lean on Rao (1998) to analyze
how Consumers Union sought to promote the
model of non-profit watchdogs as radical
critics that evaluated products and the work-
ing conditions that they were made under,
and how it was hammered into place by
Consumer’s Research and its supporters,
who promoted the idea of a watchdog as an
impartial critic rather than as a radical advo-
cate. Finally, in Cell 4, integration is the
likely outcome since the proposals are com-
patible, and even if one party has decisive
power, there is little cause for ideological dis-
agreement. We draw on Haveman and Rao
(1997) and Haveman, Rao and Parachuri
(2007) to discuss how alternative proposals
about how to organize thrifts were blended
into a hybrid form – the Dayton/Guarantee
stock plan during pre-Depression America
due to the influence of the Progressive
movement.
It is important to note that these cells are
not absorbing states. In principle, settlements
can move across quadrants; so, for instance,
357
what was a patchwork in Cell 2 can transit
into Cell 4 and vice-versa. Our goal is not to
propose an irreversible stage model, but
instead to think of settlement activity and, by
implication, codification as advancing and
receding processes rather than binary, on-off
mechanisms.
The remainder of the chapter is devoted to
giving an illustration of each of the four cells,
and then discussing the framework. Below,
we outline how the construction of the SBIC
form was an example of a fragile settlement
that eventually dissolved because of the lack
of power the contestants had over each other
and the incompatibility of the goals that were
coalesced into the SBIC form.
QUADRANT 1: SOMETHING FOR
EVERYONE: THE CASE OF SBICS
The undeniable pain experienced by small
businesses during the Great Depression in
conjunction with serious concerns about
the changing nature of the U.S. political
economy made the problem of how to pro-
vide capital to small business into an impor-
tant political issue. In the firmament of
American ideological heroes the ‘small
businessperson’ evokes images of Jefferson,
Tocqueville, and Horatio Alger. Helping
small business was an ideal ideological
weapon for Democrats supporting govern-
ment intervention in the economy. They
could propose legislation to support small
business, thereby posing dilemmas for con-
servative Republicans opposed to govern-
ment economic intervention.
Federal support for small business is not a
simple case of an interest group appealing to
politicians for relief, because small busi-
nesses were not organized into a coherent
social group with a distinct identity, and
therefore were never directly represented
(Kilgore, 1938; Ziegler, 1961). Conservative
Republicans reflexively opposed govern-
mental assistance to small business.
Ideologically, they were strong supporters
of ‘free enterprise,’ so they were constantly
exposed to the uncomfortable political
358 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
question of opposing an icon of free enter-
prise: small business.
The four key actors in the discussion
about providing financial assistance to small
business were: two industry groups, commer-
cial bankers and investment bankers, and
two socio-political groups that we term
the populists and the Schumpeterians. From
the political settlement between these
four groups would come a nominally
single organizational form, the SBIC, that in
actuality consisted of three related but
different manifestations. Each actor under-
stood the problem differently, even to the
point of defining the small businesses worthy
of financial support differently and therefore
the favored mechanism for delivering sup-
port differed. An additional actor, the inde-
pendent venture capital firm, emerged
immediately after World War Two, was out-
side the initial settlement, but was a factor in
the settlement’s eventual collapse.
Each group had different interests and goals
to further, and championed different propos-
als. The commercial banks wanted to prevent
the government or government-funded entities
from competing with them to provide short-
term loans to businesses. They also coveted
the right to own equity in industrial corpora-
tions and undertake the investment banking
functions that they had lost with the passage of
the New Deal Glass-Steagall Act. The invest-
ment bankers wanted to ensure that businesses
raised capital through them and to loosen SEC
regulations on stock market listing. Their
main goal was to prevent the government from
providing capital in such a way as to circum-
vent the need to list on public markets. The
populists were strongly represented in
Congress, though, as a group, they were not
monolithic. Their goals were conceptually
clear, i.e. provide government support for
small business, while their policy prescrip-
tions were diverse and disconnected. They
could act forcefully: For example, in the
1930s they mandated that the Reconstruction
Finance Corporation provide loans to small
business, which it did grudgingly.
The Schumpeterians consisted of elite
East Coast businesspersons and educators
who believed that the small businesses
worthy of support were those capable of
growing to be large corporations. The prob-
lem was a shortage of venture capital (Liles,
1977). Given this shortage, they reluctantly
favored government programs to subsidize
investors, but they fervently believed that
these investments would be profitable.
They envisioned small technology-based
firms forming the seeds for industries
capable of creating the jobs of the future. For
them, the new Horatio Alger would be the
technically trained entrepreneur. The investor
would be a specialized funder of new firms,
the venture capitalist.
During and immediately after World War
Two, a number of plans for providing finan-
cial support to small business were floated.
There was also private sector experimenta-
tion in providing capital to small business. In
1946, the first venture capital firm, American
Research and Development (ARD) was
formed in Boston as a closed-end investment
fund and raised capital through a public
stock offering (Hsu and Kenney, 2005).
Simultaneously, three venture capital firms
funded by wealthy New York families were
formed. Also, some banks established units
to provide loans to small businesses, though
they quickly retreated. The four small ven-
ture capital firms continued to operate, and
received much publicity, but had little overall
impact on small business or new firm
formation.
The Republicans gained control of both
Congress and the White House in 1953 and
abolished the Depression Era Reconstruction
Finance Corporation (RFC), which had been
a favorite of Democratic legislators, and had
a mandate to fund small firms, among its
many other duties (Bean, 1996; Ziegler,
1961). To secure sufficient support for the
RFC closure and protect themselves from
the political attack, the Small Business
Administration (SBA) was created. To
counter populist criticism of the SBA’s per-
formance, the Administration commissioned
studies by the Hoover Commission in 1955
and by the Council of Economic Advisors in
1957, both of which found no significant
 NEW FORMS AS SETTLEMENTS
capital shortages for small business. Despite
these study results, the populists were able to
frame an issue to the public, i.e. a lack of fund-
ing for small business requiring a solution.
The populists in Congress continued to
pressure the Administration. In 1957 the
House Small Business Committee requested
that the Federal Reserve, which was
sympathetic to their position, conduct a study
of the credit needs of small business. In April
1958, the Federal Reserve Board study sug-
gested that funds were needed for financing
new firms and the expansion of existing
firms. This is a subtle shift, whereas the
populists wanted loans for small businesses,
the report supported the Schumpeterians.
The political situation also changed. The
economy was sinking into recession, and
with midterm elections approaching the
Republican majority was concerned, so the
Administration decided to support legisla-
tion. A final settlement to the long debate
was at hand.
Something for everyone
Six Senate bills were introduced to assist
small businesses in obtaining financing. The
ABA, which had opposed the formation of
the SBA, favored using existing state and
local development corporations as the fund-
ing vehicles for small businesses. The
commercial banks wanted a waiver from
the Glass-Steagall Act so that they could
invest in firms. The Investment Bankers
Association did not take an official position,
but Edward T. McCormick, President of the
American Stock Exchange, testified that he
supported publicly-listed, closed-end invest-
ment trusts to provide venture capital. The
four existing venture capital firms did not
testify, but the Schumpeterians, as repre-
sented by the Committee for Economic
Development, supported the bill (Anglund,
2000: 64). On August 21, 1958 the Small
Business Investment Act was ratified.
None of the contestants had a decisive
edge over the others in terms of size, ability
to mobilize or to frame. So all the protago-
nists received their wishes. The Act authorized
359
three organizational forms and financial sup-
port for an already existing form. There was
a bank-based SBIC, an SBIC that raised cap-
ital on public markets and operated as a
closed-end fund, a privately owned SBIC that
received low-interest federal matching loans,
and existing industrial development corpora-
tions could receive federal monies. The legis-
lation was an amalgam of proposals with
little direction and ambiguous goals. Was it
meant to provide loans to existing firms or
support startups? Would it be a venture capi-
tal program as the Schumpeterians hoped or
a more general support program? There were
no guidelines, restrictions on the investment
fields, or the requirements in terms of the
skills, capabilities, or rectitude of the license
applicants. In effect, any group of investors
with $150,000 or more was able to borrow
low-cost, guaranteed Federal funds.
Though sanctioned by Congress, the
SBICs had to construct legitimacy. With the
vague enabling legislation, the organizational
forms would be defined in practice. As cre-
ations of Congress, only four months after
the SBIC Act was signed into law an indus-
try association, the National Association of
SBICs (NASBIC) was formed. Fortunately,
there was a bull stock market from 1959
through early 1962, and investors were
receptive to the initial public stock offerings
of the public SBICs. In July 1960, The
New York Times described the situation
aptly: ‘Wall Street, seldom swift to bestow its
affections, has found a new darling – the
small business investment company (Kraus,
1960: 1). There was a wave of new SBICs
attracted by the promise of easy capital
gains. Legitimacy appeared to be guaranteed.
The positive appraisal of the SBICs’ quest
for legitimacy changed in 1962, as a stock
market downturn surprised the public SBICs.
Unfortunately, as closed-end funds, investor
disenchantment led to their valuations being
so depressed that they attracted corporate
raiders. The result was that they were either
acquired and liquidated or their managers
turned in their SBIC licenses. The bank-
affiliated SBICs, though professionally run,
also were troubled. Many banks owning the
360 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
SBICs were disappointed because their bank
connections did not provide many good
investment opportunties. The SBICs were
difficult to administer because the skills
necessary for finding and making a good
loan differed sharply from finding and devel-
oping a good investment (Hayes and Woods,
1963: 19). Many of the bank SBICs became
inactive.
The private SBICs were most numerous.
And yet, they were plagued by inadequate
capital, inexperienced management, and a
lack of connections necessary for a high-
quality deal flow. They invested in a wide
number of areas including real estate, distri-
bution, wholesale grocery operations, and
many others. By 1963 it was apparent that
the Program had attracted unscrupulous indi-
viduals. Investigations found that ‘nine out of
ten SBICs had violated agency regulations
and dozens of companies had committed
criminal acts,’ thereby threatening the pro-
gram’s legitimacy (Bean, 2000). In 1964, the
SBA instituted a 90-day hiatus on issuing
new licenses as it decided to reorient the pro-
gram to stress ‘venture capital investing as
opposed to real estate and secured lending’
(SBIC Evaluation Service 1964: 1).
In 1966, Congress gave the SBA enforce-
ment authority to investigate conflicts of
interest; to fix legal responsibility on the offi-
cers, directors, and agents of unlawfully
operated SBICs; and to levy stiff penalties
and fines. The effort to end fraud made the
SBIC Program increasingly bureaucratic and
constraining. The proliferating regulations
and reporting requirements prompted the
most successful SBIC operators, the ones
practicing venture capital, to consider leav-
ing the Program (SBIC Evaluation Service,
1966: 5).
In 1964, the Small Business and Venture
Capital Associates (SBVCA) was formed
with a board of directors representing the
Schumpeterian elite of the East Coast finan-
cial and private venture capital world. The
SBVCA operated a center affiliated with the
Committee for Economic Development to
study the role of venture capital in funding
small business. In a 1967 report they con-
cluded that the SBIC Program was replete
with incompetence and even criminality and
suggested measures that, were they enacted,
would have ended the Program.
The malfeasance, the resultant increased
federal regulatory oversight, criticism by
venture capitalists outside the Program, and
continuing experimentation with other orga-
nizational forms for venture capital investing
threatened to destabilize the settlement.
NASBIC was aware of the schism emerging
between its members who were loan-oriented
and those that were venture capitalists. The
growing importance of the external venture
capitalists prompted NASBIC to open dis-
cussions regarding representing them in
Washington. This initiative met with little
success, as the venture capitalists decided to
create their own organization. The fragile
settlement was now ready to collapse.
In the early 1970s, even while the SBIC
Program continued to operate, a new organi-
zational form, the private limited partnership,
which was first used for a venture capital
organization in 1958, became the dominant
organizational form for the external venture
capitalists. In April 1973 the National
Venture Capital Association (NVCA) was
launched. In their membership solicitation
letter they stated that members must be ven-
ture capitalists ‘investing private capital in
young companies on a professional basis
(SBIC/Venture Capital (1973: 3).’ The criti-
cal proviso was that members must invest
private capital. The bank and publicly-owned
SBICs not using Federal monies could join,
while the private SBICs were unwelcome.
The venture capitalists operating SBICs
abandoned their SBICs, formed limited part-
nerships, left NASBIC, and joined the newly
formed NVCA. The formation of the NVCA
marked the end of the settlement achieved by
the 1958 SBIC Act. The banks were the sole
remaining significant venture capitalists for
whom the SBIC Program was significant
because they continued to be blocked by
the Glass-Steagall Act from freely investing
in firms.
 NEW FORMS AS SETTLEMENTS
The NVCA proved to be a stable settle-
ment, as it was organized to represent private
venture capitalists organized into the limited
partnership, which was the result of a bout of
organizational mimesis and soon jelled into
the dominant organizational form for venture
capital investing. The SBIC Program and
NASBIC continued representing the remain-
ing private SBICs and the bank SBICs, both
of which were no longer significant players
in the venture capital market, and the public
SBICs disappeared completely.
QUADRANT 2: A PATCHWORK:
DIFFERENT FLAVORS; FRENCH
GASTRONOMY
Below, we outline how French gastronomy
featured two opposing categories – classical
and nouvelle cuisine, each of which had an
identifiable code of conduct and elements.
Subsequently, we elaborate how the borrow-
ing of techniques and ingredients breached
the boundaries of both categories, and cre-
ated a patchwork. In doing so, we heavily
lean on Rao, Monin, and Durand (2003,
2005). The parties to the initial conflict and
subsequent settlement were chefs belonging
to the society of French chefs (Maitres
Cuisiniers de France). Ratings agencies such
as the Guide Michelin and Gault Millau also
played a part, as did crusading journalists.
The setting was the haute cuisine restaurants
serving affluent customers. Since the differ-
ences between classical and nouvelle cuisine
existed more in the press than the kitchen,
both proposals were compatible. Moreover,
neither classical nor nouvelle had a decisive
political edge, so the outcome was a patch-
work of many flavors.
The origins of classical cuisine are trace-
able to the French Revolution of 1789, which
undermined the institutional logic of the
ancien regime cuisine and the associated
identity of the chef. In the ancien regime,
meals were public spectacles organized
according to hierarchy, and the chef was the
property of a patron or noble. But, after the
361
French Revolution, chefs who once worked
in the houses of private patrons offered their
services to the public by establishing restau-
rants in Paris and its environs (Ferguson,
1998). Chefs and culinary journalists sought
to systematize the principles of cooking in
restaurants, and the most influential was
Antonin Caréme (1784–1833). Stressing del-
icacy, order, and economy, Caréme brought
symmetry to the service of meals, and intro-
duced a new awareness of freshness and san-
itation into the French kitchen. Caréme’s
ideas quickly diffused throughout the
kitchens of French restaurants (Ferguson,
1998) and were strengthened by a new breed
of chefs such as George Auguste Escoffier
(1847–1935) and his circle of collaborators.
In his Guide Culinaire (1903) that remains a
central text in the training of professional
cooks even to the present day, Escoffier con-
ceived of classical cuisine as codified gram-
mar of culinary practice: a product can be
cooked in different ways, served with differ-
ent sauces and accompanied with different
fillings. Escoffier’s guide was issued in sev-
eral editions, and remained as the dominant
orthodoxy until it was undermined by the
nouvelle cuisine movement.
In 1970 a group of young French chefs, led
by Paul Bocuse, Michel Guérard, the
Troisgros brothers, and Alain Chapel,
invented a free-form style of cooking.
Culinary journalists such as Christain Gault
and Henri Millau christened their style as
nouvelle cuisine, codified it, and postulated
the Ten Commandments of nouvelle cuisine,
and launched a culinary guide called Gault-
Millau. Gault, Millau and other culinary
journalists were theorists who depicted nou-
velle cuisine as a challenge to the codifica-
tion of Escoffier and as an anti-school
valuing experimentation, autonomy, and
innovation. Chefs at the vanguard of the nou-
velle cuisine movement, such as Bocuse,
Troisgros, and Chapel, aimed for simplicity
and transparency of presentation. Nouvelle
cuisine wanted the chefs to have a role in cre-
ating and inventing dishes rather than simply
understanding the intentions of Escoffier.
362 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
In classical cuisine, the culinary rhet-
oric reveals the emphasis on conservatism
and preservation. Often, dishes have the
names of places, noblemen, or mythological
characters associated with dishes. Neirinck
and Poulain (1988) studied Caréme’s texts
and found that nearly 213 dishes had names
associated with noblemen. Moreover, cook-
ing consisted of the application of two
specific rules and associated techniques:
conformation to the rules formulated by
Caréme and Escoffier, and sublimation of the
ingredients such that the raw material is visu-
ally transformed. Fischler (1993: 238) sum-
marized it as follows: ‘The art of the cook
consisted in accommodating, in transform-
ing, in metamorphosing the raw material, to
put it from Nature to Culture.’
By contrast, the culinary rhetoric of nou-
velle cuisine emphasized innovation, and the
appellations dished referred to poetry and
imagination rather than place names or the
names of nobles (Weiss, 2001: 233–234).
Nouvelle cuisine relied on the rules of
transgression and acclimatization (Fischler,
1993). Transgression consisted of using
unconventional techniques; dishes mixing
meat and fish, salads mixing vegetables and
foie gras, or pot au feu featuring fish.
Acclimatization was the import of exotic
foreign cuisine techniques and ingredients,
notably from Japan and the former colonies
of France (Beaugé, 1999). The ingredients of
nouvelle cuisine were fruits, vegetables,
potatoes, aromatic herbs, exotic ingredients,
sea fish. In summary, ‘the object of the culi-
nary arts is no more the metamorphosis of
the food product, but the revelation of its
essential truth’ (Fischler, 1993: 238).
A patchwork of different flavors
Classical cuisine and nouvelle cuisine were
not rigid orthodoxies but theories which
could be appropriated by chefs (Ferguson,
1998). Indeed, culinary journalists such as
Henri Gault and Christian Millau depicted
Escoffier and classical cuisine as rigid, and
portrayed nouvelle as an oppositional cate-
gory. All chefs had to nominate three of their
dishes on the menu as signature dishes –
which telegraphed their identity, and had to
be served regularly to ordinary customers.
Signature dishes enabled external actors such
as the Guide Michelin to classify chefs into a
category, but that did not mean that all chefs
assigned to a category equally conformed to
the norms, rules, and dictates of the category.
Some chefs faithfully adhered to the
norms of the category by using the cooking
techniques and ingredients associated with
the category. Consider a chef whose signa-
tures are all in one category and who does
not blend cooking techniques and, instead,
only uses techniques affiliated with his or her
chosen category. Jean-Paul Lacombe, of
Léon de Lyon, a two-star restaurant in Lyon,
exemplifies the canons of classical cuisine
with three signature dishes such as crayfish
mousse (mousse de brochet), panned tripe
(Gras double sauté ), and chicken cooked
with red wine, ‘the ancient way’ (Coq au vin
rouge à l’ancienne), offered in 1981. These
signature dishes pay homage to the middle-
class kitchens of Lyon during the 19th cen-
tury and refer to classical cuisine ingredients:
crayfish and tripe. However, all of them use
classical cuisine techniques of cooking: pan-
ning, mousse, and stewing meat in wine. The
chef, Jean-Paul Lacombe, defines himself as
an embodiment of classical cuisine enshrined
in the history of Lyon: ‘I love Lyon, I like the
region and its products; my cuisine is deeply
inspired by this native area: it is a cuisine
bourgeois, a cuisine that smells good º. My
strength? a traditional cuisine based on typi-
cal products from Lyon.’
Some chefs signal a hybrid identity – two
of their signature dishes can belong to classi-
cal (or nouvelle) genre, and the remaining
dish falls in the nouvelle (or classical) genre.
In all cases, the signature dishes adhere to the
rules of the genre, and so patrons can have a
choice of classical and nouvelle cuisine
dishes faithfully executed according to the
conventions of the genre. An example is La
Poularde (‘The Fat Chicken’) located in
Montrond-les-Bains, the oldest two-star
restaurant in France. In 1990, Gilles Etéocle
offered the following dishes: cooled off
 NEW FORMS AS SETTLEMENTS
marinated salmon with sesame (saumon
mariné tiédi aux graines de sesame), a pure
nouvelle cuisine dish based on account of the
spices and techniques used. This dish fea-
tures a natural river fish and a spice not avail-
able in France, sesame, which was not
traditionally used as a seasoning in marinated
preparation before. Sesame was mainly used
as an imported product in bakery and pastry,
for dessert preparation, not in fish prepara-
tion. So the rules of transgression and
acclimatization apply. Etéocle also has two
classical cuisine dishes such as chicken fric-
assee with truffle (fricassée de poulette truf-
fée) and big game (gibier). The two pure
classical cuisine dishes use classical cuisine
ingredients: truffles, big game, and rely on
the classical cooking technique – fricassee.
But chefs can have all of their signature
dishes in the classical or all nouvelle cate-
gories, and yet borrow elements from a rival
cuisine, and blend them with their claimed
cuisine. An exemplar is Bernard Collon of
‘Auberge de Letraz’ located on the border of
the Annecy Lake. Collon was awarded one
star in 1975, but downgraded in 1996. Collon
defines himself as a classical cuisine chef,
who uses fresh ingredients of nouvelle cui-
sine. He characterized his identity as follows:
‘I do not like the caricatured classification
between classical and nouvelle cuisine. I cat-
egorize myself in the “Classics,” but º I use
fresh products º you modernize.’ In 1981,
for example, two of Collon’s signature dishes
breached the boundaries of classical cuisine:
duck aiguillettes with quince (aiguillettes de
canard aux coings), and escalope of salmon
trout with sorrel (escalope de truite
saumonée à l’oseille). Both dishes combine
classical cuisine ingredients (salmon trout
and duck) with nouvelle cuisine ingredients
(quince and sorrel ) and nouvelle cuisine
rules of cooking (aiguillettes and escalope).
Finally, chefs can follow a hybrid
approach and still borrow techniques from a
rival cuisine. Consider Jean-Paul Jeunet, the
chef of the Restaurant de Paris in the Jura
province, who in 1992 chose the following as
his signature dishes: lightly poached foie
gras and a Macvin reduction (foie gras poché
363
et caramel de Macvin), snails cooked in
butter served in a liquorice court bouillon
(embeurrée d’escargots dans une nage à la
réglisse), and boned out fat chicken cooked
in white wine and garnished with morels
(poularde en gigot de vin jaune et morilles).
The first dish is a nouvelle cuisine dish,
while the others belong to the classical cui-
sine genre. However, all borrow ingredients
and cooking techniques from each genre. The
first dish combines a highly classical cooking
technique: poaching (simply using boiling
water) and a very classical ingredient: foie
gras, with a Macvin caramel, or sugared
dessert with a liqueur based on a local marc.
The combination of salt and sugar is a nou-
velle cuisine characteristic. The second dish
mixes earth and sea, a typical feature of nou-
velle cuisine, in complete disrespect to tradi-
tion and the natural order of classical cuisine,
through an ingredient: (snails) and an appel-
lation – swimming. Finally, the third dish is
pretty classical, but the carving technique,
‘gigot’ (not adequately translated as ‘boned
out’) is usually adequate for mutton (a leg of
mutton) and is not properly used for chicken
under the classical cuisine orthodoxy. Jean-
Paul Jeunet stated: ‘My role is to bring some-
thing, to transcend the product through the
techniques. I am a technician, first and above
all ’ (italics ours).
As these descriptions indicate, French
chefs did not neatly fall into classical
and nouvelle cuisine camps, but instead
straddled them. Moreover, those whose cui-
sine was dominantly classical or nouvelle
also experimented by borrowing techniques
and ingredients from the rival cuisine.
Rao, Monin and Durand (2003) formally
modeled the creation of a patchwork by
analyzing the extent to which chefs belong-
ing to classical and nouvelle cuisine bor-
rowed materials from each other. They
argued that when boundaries are strong due
to external sanctions, most actors don’t
borrow, and the sprinkling that do borrow do
so most of the time. As a result, the mean
number of elements (µ) borrowed from the
rival category for each actor is likely to be
low but the variance (σ2) in the number of
364 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
elements borrowed is high. Conversely, when
boundaries are eroding, the mean number of
elements (µ) borrowed by an actor from the
rival category increases, but the variance (σ2)
in the number of elements borrowed
declines. What increases µ and decreases σ2?
They argued that geographically high-status
actors have more latitude to be original, and
can borrow techniques from a rival category,
and serve as influential role models for other
chefs. Their study of French haute cuisine
showed that borrowing by high-status actors
increased the mean number of elements (µ)
borrowed by an actor from the rival category,
but reduced the variance (σ2) in the number
of elements. Thus, boundaries between a cat-
egory weakened when members of a cate-
gory borrowed from the rival category, and
the sources of erosion were from within
and without. They also showed that those
who borrowed when the categorical differ-
ences were strong received penalties in the
form of a downgrade by external evaluators.
The penalties diminished as the fraction of
chefs who borrow increased and borrowing
became prevalent in the social system. Thus,
chefs redrew boundaries through borrowing
which created a patchwork, and, in turn,
critics based their assessment on the
patchwork.
QUADRANT 3: IMPOSITION: THE
CASE OF CONSUMER WATCHDOGS
The saga of non-profit consumer watchdogs
provides a telling example of how a settle-
ment was imposed due to powerful external
actors. So in this case it is not the actors
making a settlement, but rather an imposition
of a settlement by external audiences. The
parties were rival entrepreneurs championing
different visions of a non-profit consumer
watchdog, other media, and Congress. We
rely heavily on Rao (1998) to provide this
case study.
In the 1930s two issue entrepreneurs, Stuart
Chase and Frederick Schlink, attempted to
improve the protection of consumers through
the establishment of a new mechanism of con-
trol – the Consumer Watchdog Organization
(CWO). Chase, an accountant by profession,
had written two polemics entitled The
Challenge of Waste (1922) and The Tragedy of
Waste (1925) to warn consumers against prod-
ucts that were superfluous and detrimental.
Schlink had worked for the National Bureau of
Standards and the National Standards
Association; together with Chase, in 1927, he
published Your Money’s Worth, in which man-
ufacturers were blamed for creating wasteful
variety and advertisers were accused of deceit-
ful claims.
Building on his experience with a con-
sumer’s club established in a church in White
Plains, New York, Schlink created Consumer
Research (CR), whose Bulletin would ‘inves-
tigate, test, and report reliably hundreds of
commodities’ (Silber, 1983: 18). The goal of
CR – a non profit organization that distanced
itself from any political party – was to pro-
tect consumers by pushing manufacturers to
reduce wasteful variety and keep fair prices
through standardization. Scientific analysis,
and not emotions, had to guide consumption.
CR shielded itself from the opposition of
manufacturers and advertisers by building on
the ideas of ‘service’ to the customer and
truth in advertising – concepts that firms
were implementing to professionalize their
trade and as a competitive weapon – and by
emphasizing standardization and testing. CR
grew quickly: in 1927, it had 656 sub-
scribers, but by 1933, there were 42,000 sub-
scribers. In 1935 the readership of the
Consumers Research Bulletin reached a
circulation of 55,000. CR’s growth was
also fostered by the Depression, which
forced consumers to pay more attention to
price/quality ratios, and by a wave of books
that ran exposés of manufacturing and
advertising practices.
As CR grew, new activists joined, while
some older activists – among them Chase – left
the organization because of disagreements
with Schlink. These disagreements stemmed
from different perspectives on the scope of
 NEW FORMS AS SETTLEMENTS
CR – Chase and other members wanted to
deal with social questions concerning wages
and working conditions, while Schlink and
his supporters believed that these concerns
could not be scientifically tested and there-
fore were outside the boundaries of CR’s
responsibilities towards consumers. In 1935,
Arthur Kallett, an ex-colleague of Schlink at
the American Standards Association and then
member of the board of CR, founded a new
organization called Consumer Union (CU),
which aimed at protecting both consumers
and workers. The founders of CU defined the
consumer as a worker who was concerned
not only about wasteful variety and deceitful
advertising, but also about wages and
income. Living standards could be improved
through standardization, product testing, and
control of labor conditions. Labor concerns
also influenced purchasing choices; for
example, CU urged members to boycott anti-
union manufacturers. Labor legislation that
created a favorable environment for labor
unions – for example, the Norris-La Guardia
Act in 1932 and the Wagner Act in 1935 –
stimulated CU’s growth: by the end of 1936
it had 20,700 members, and by 1937 it had
close to 40,000 members.
Imposition by external actors
CR and CU provided two different models
for a consumer watchdog organization.
While the concepts of rational decision
making, standardization, and scientific test-
ing that were initially promoted by CR
spread to governmental agencies and profes-
sional societies, small, newly founded con-
sumer groups were modeled after CU. These
endorsements stimulated CU’s founders to
increase circulation of the organization’s bul-
letin, Consumers Union Reports. However,
CU’s radical agenda encountered resistance
from diverse institutional actors: in 1939 the
postmaster general of New York banned the
bulletin and sixty-two newspapers, including
the New York Times, refused to sell advertis-
ing space to CU because of its attacks on
365
industries. Professional journals such as
Science and the Journal of Home Economics
declined space to CU because CU’s claims
could not be scientifically substantiated. In
1937, a new watchdog organization began to
publish Consumer Bureau Reports, which
provided favorable ratings in return for free
samples from manufacturers. Both the simi-
larity of the name of the bulletin and its
format could confuse the readers and weaken
CU’s reputation.
Further, CU was directly smeared as a
Communist newspaper by the Hearst news-
papers, due to a series of CU exposés of
Hearst’s Good Housekeeping Institute (so
much so, that the Federal Trade Commission
launched an investigation against the insti-
tute). A few years later, in 1938, a House
committee on subversive activities, chaired
by Congressman Dies, sought to investigate
whether CU was engaged in un-American
activities harmful to the national interest.
J. B. Matthews, an associate of Schlink at
CR, served as counsel for the Select
Committee on Un-American Activities and
suggested that Kallett’s writings and the fact
that a CU ex-employee, Susan Jenkins, had
admitted to being an employee of a
Communist newspaper (the Daily Worker)
were proof that the organization was a
Communist front. The Hearst newspapers
printed Matthews’s accusations in full.
Although there was no systematic investi-
gation of the charges leveled at CU, the Dies
Committee’s allegations became a matter of
concern to the founders and supporters. This
spate of attacks from multiple actors led
CU’s founders to disengage from their radi-
cal agenda. Slowly, CU began to disengage
from radical advocacy; thus, reports on labor
conditions were no longer included in CU’s
bulletin, which more conservatively focused
on product testing and ratings. In parallel,
CU developed a relationship with scientific
societies in Boston and sought to inject sci-
ence into its testing approach, and by 1944,
its circulation began to increase. CU had won
the battle with CR but lost the battle for
ideology. So much so that when Ralph Nader
366 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
wrote his critique of the auto industry,
he first approached CU, only to be rebuffed
as unscientific, and later went on to estab-
lish a new kind of non-profit consumer
watchdog – one that looked at the legal rights
of consumers.
QUADRANT 4: INTEGRATION: THRIFTS
IN PRE-DEPRESSION CALIFORNIA
Early thrifts were incarnations of beliefs
and values concerning saving and home
ownership and took on value far beyond the
technical requirements of the financial-
intermediation task at hand and became insti-
tutionalized systems of moral authority. We
rely on Haveman and Rao (1997) and
Haveman, Rao and Parachuri (2006) to
describe how thrifts based on the model of
cooperation among friends and enforced
saving were replaced by thrifts based on
bureaucratized cooperation among strangers
and voluntary saving.
There were three basic thrift forms or
‘plans,’ as contemporary observers called
them. Each plan represented a proposal
about how to organize thrift. In order of
appearance, these were the mutual plan
(which had three variants – terminating,
serial, and permanent), the Dayton plan, and
the guarantee-stock plan. In addition to these
three basic plans, four ‘hybrid’ plans
emerged, which combined the features of
two or three basic plans: mutual/guarantee-
stock, mutual/Dayton, mutual/Dayton/guar-
antee-stock, and Dayton/guarantee-stock.
These hybrid plans represented attempts to
integrate the ‘mutual’ plan with its other
extreme – guaranteed stock plan.
In the mutual plan, all members were on
equal footing: all were part owners, saved
and repaid home loans on the same schedule,
and shared in the association’s profits.
Mutual-plan thrifts had rigid schedules for
dues and loan payments; they enforced these
schedules with fines for late payment and
early exit. The Dayton plan relaxed the
mutual plan’s rigid rules by replacing install-
ment shares with optional-payment and paid-
up shares, allowing early payment of loans,
and eliminating fees for membership, late
payment, and early withdrawal. The guaran-
tee-stock plan introduced non-withdrawable
stock, which was paid in at founding and
which was used to insure other members
against losses. This joint-stock plan linked
owners to savers and borrowers in an internal
market for risk and return; it contrasted
sharply with the mutual and Dayton plans,
which were both cooperatives whose mem-
bers were all owners. The four hybrid plans
were recombinations of two or all three basic
plans. For example, the Dayton/guarantee-
stock hybrid combined features of the
guarantee-stock and Dayton plans: this joint-
stock plan created an internal market for risk
and return, separated borrowers and savers,
and allowed great flexibility for both.
The California thrift industry grew rapidly
from its origins. In 1890, the first year
detailed data are available, 116 thrifts oper-
ated. In 1894, 146 thrifts operated with
34,000 members and 9,000 mortgage loans
outstanding; by 1928, the number of thrifts
had risen to 216, with 114,000 members and
92,000 mortgage loans outstanding. While
the industry grew more dramatically in scale
rather than in sheer numbers, the distribution
of organizational forms shifted dramatically.
Until 1900, the industry was composed
almost solely of mutual-plan thrifts, although
there were rare instances of the Dayton,
guarantee-stock, and mutual/guarantee-stock
plans. After 1900, the number of mutuals fell
and the number of Dayton and mutual/guar-
antee-stock thrifts rose. Then, after 1906, the
number of Dayton/ guarantee-stock thrifts
rose dramatically. In 1890, the mutual plan
constituted over 90 percent of all thrifts oper-
ating. By 1919, that number fell to 48 percent,
and by 1928, to 13 percent. By contrast, the
Dayton/guarantee-stock plan rose from
1 percent of the industry in 1906 to 20 percent
in 1919, and to 72 percent in 1928.
How did the Dayton/guarantee-stock plan
suddenly replace the serial mutual plan as the
 NEW FORMS AS SETTLEMENTS
dominant form? When the population in
California was transformed, by immigration
and internal migration, into a society of
strangers, these social bonds frayed.
Immigration and internal migration together
accounted for 65 percent of California’s pop-
ulation increase between 1890 and 1900, and
87 percent of the population increase
between 1900 and 1910. Social ties could no
longer enforce the ethic of forced saving and
a system of collective borrowing from
friends. Thus, demographic change made the
mutual form of thrift ineffective.
None of the other forms of thrift in exis-
tence at the turn of the century could replace
the mutual form, because all violated, in
some way, the original ideals of thrift
(Haveman and Rao, 1997: 1640–1641), and
all contravened the prevailing political cul-
ture. Two forms in particular merit mention,
as they were combined to create the hybrid
Dayton/guarantee-stock form (Haveman,
Rao, and Parachuri, 2006). The pure Dayton
form was not viable when it first appeared in
1899 because it eliminated structured effort,
reduced mutuality, and had an identity that
was similar to banks; the pure guarantee-
stock form was unacceptable when it first
appeared in 1898 because it eliminated mutu-
ality. Moreover, neither form ever achieved
sufficient numbers to confer great legitimacy
(Hannan and Freeman, 1987; Hannan, Pólos,
and Carroll 2007). At the dawn of the twenti-
eth century, then, there was a problem in the
thrift industry, but no acceptable solution. As
a result, the industry languished and the
number of thrifts fell from a peak of 157 in
1898 to a low of 85 in 1918.
Integration: The Progressives
It was the Progressive movement with its
emphasis on rationality and bureaucracy
that drove the integration of Dayton and
Guaranteed stock plans. Progressivism arose in
response to the political machines dominating
municipal government, and sought to impose
rationality and order. Progressives won
367
political power, and enacted regulations gave
legal standing to three elements of the
Dayton/guarantee-stock form of thrift –
guarantee stock, optional-payment shares,
and paid-up shares.
By 1913, the specific features of the
Dayton/guarantee stock form were author-
ized but this by itself was inadequate. The
meaning of thrift not only needed to be
reconstituted, it also needed to be integrated
into the prevailing cultural order. This consti-
tutive legitimation project required the cre-
ation and spread of intermediary institutions,
both theorists like the news media, which
constructed functional accounts of the gen-
eral Progressivist model of rational and effi-
cient bureaucracy, and naturalizing analogies
like the city-manager form of municipal gov-
ernment, which made bureaucracy a ‘natural’
part of the social fabric. It was only the rise
of Progressive newspapers and the diffusion
of the city-manager form of municipal gov-
ernment that made the Dayton/Guarantee
Stock plan natural and possible.
As Progressive newspapers proliferated
across the various counties of California, and
as Progressive ideas embodied in the city
manager form of government became
entrenched in different parts of California,
thrift executives began to redefine thrift as
efficiency and the separation of powers
between managers and owners as the best
way to organize enterprises. The Progressive
zeitgeist which treated even the governance
of a city as analogous to a joint-stock
corporation tipped the balance in favor
of the Dayton/Guarantee stock plan.
Integration ensued through conversion of
existing thrifts and the birth of new enter-
prises. The Dayton/Guarantee stock plan
gained recruits through defections of existing
thrifts based on other plans, but mainly
through the creation of new thrifts. Existing
plans saw the shifting winds of cultural
change and tacked their sails to adjust to the
new winds. The Progressive zeitgeist was the
banner under which the new entrepreneurs
mobilized themselves. Since there was inte-
gration, the settlement was long-lasting – it
368 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
lasted until thrifts were besieged by competi-
tion from commercial banks due to deregula-
tion in the Reagan era.
DISCUSSION
Our conception of new forms as settlements
strengthens the connection between neo-
institutional theory and organizational ecol-
ogy. Neo-institutionalists postulate that
organizational forms are created through an
inherently political process. Organizational
ecologists assert that organizational forms
are socially coded identities. So the question
is how conflict and contestation culminate in
a code. Our suggestion is that forms have to
be first constituted as settlements – that is
agreements have to be negotiated among par-
ties before new forms can be institutionalized
as codes. A settlement is a set of understand-
ings and expectations about a form that are
shared among internal and external audi-
ences. Settlements become codes only when
these understandings and expectations
become default conditions of membership,
and are enforced by external and internal
audiences.
Our four examples underscore how new
forms have to be constituted as settlements
if they are to become durable and enforced
as social codes. When there is low asymme-
try in the power of the various parties and
their proposals are ideologically incom-
patible, then brittle settlements ensue as
in Quadrant 1, and are short-lived and subject
to schisms. Here the possibility of codifica-
tion of a single organizational form is
low. However, when asymmetry of power
among parties is low, and the proposals
are ideologically compatible (despite rhetor-
ical exaggeration of differences), the settle-
ments that ensue as in Quadrant 2 are durable
but constitute a patchwork. As a result,
the settlement is evolving, and codification
is uneven, with some parts being highly
institutionalized and other parts being as
yet underdetermined. In sharp contrast, when
asymmetry of power among parties is
high and proposals are incompatible, the
settlements that ensue, as in Quadrant 3,
are imposed by an external force. Such
settlements last only as long as the external
party retains its influence. If the external
party loses its grip, weaker parties gain the
leeway to defect. If the external party consoli-
dates its power, the settlement can become
durable, until the accumulation of unresolved
issues results in a conflict after a long period
of time. When one party is powerful, but
the proposals are compatible, then the settle-
ment that ensues can be long-lasting and
enforceable.
Our chapter focused more on the constitu-
tion of forms as settlements, and assumed
that durability and enforceability were an
outcome of the nature of the settlement.
Future research needs to specify the condi-
tions under which settlements gain institu-
tional strength and sanctions, and become
codes of conduct that influence the fates
of individual organizations. Studies of settle-
ment collapse would be particularly valuable,
as they could provide insight into the
boundary conditions of how organizations
are products of their environments, and envi-
ronments are outcomes of organizational
intervention.
ACKNOWLEDGMENT
We are thankful to Christine Oliver and
Heather Haveman for exceptionally helpful
comments and suggestions.
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Social Movements and Failed
Institutionalization: Corporate
(Non)Response to the AIDS
Epidemic
Gerald F. Davis and Peter J.J. Anderson
A consequence of globalization is that the
nation-state becomes too big to solve the
small problems and too small to solve the big
ones, as Daniel Bell has remarked. The same
might be said of the contemporary multina-
tional corporation (MNC). As MNCs have
grown in size and influence in recent decades,
they have faced growing demands to assume
greater responsibility for solving social prob-
lems large and small. Corporations are
expected to provide safe products for their
consumers, decent working conditions for
their employees, and to police the ethical
standards of their suppliers and even the
countries where they operate. More recently,
MNCs have been asked to address global
problems that would have previously
been seen as the responsibility of govern-
ments, such as the HIV/AIDS pandemic and
the looming crisis of climate change.
Such problems outstrip the capacities of
14
individual states to respond effectively. They
require a collective response, from govern-
ments and from transnational actors such as
corporations. Yet demands to address broad
social problems challenge conceptions of
what a corporation is for, and to whom it
owes a responsibility. How are we to under-
stand corporate responses to demands for
greater responsibility in addressing global
problems?
In this chapter, we argue that organizational
institutionalism and social movement theory
offer complementary insights to address what
we might call ‘collective corporate social
responsibility.’ Collective corporate social
responsibility (CCSR) is the concept that
organizations in a sector or field are perceived
to owe an obligation to certain constituencies.
These obligations can vary across fields and
over time. For example, businesses head-
quartered in Minneapolis are expected to
372 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
provide generous support to local non-profits,
while businesses in Phoenix face no such
expectation (Marquis, Glynn and Davis,
2007). Pharmaceutical companies are expected
to provide access to their products for those
who cannot afford them, while packaged food
companies are not. And thanks to the anti-
sweatshop movement, brand-name sneaker
companies are now expected to vouch for the
labor practices of offshore suppliers who were
previously regarded as outside the realm of
their responsibility (Davis, Whitman and Zald,
2007). CCSR attaches to organizations by
virtue of their membership in a field. Efforts to
expand the definition of what organizations in
a particular field are responsible for – by social
movements and others – can thus be regarded
as institutionalization projects: they attempt to
change the definition of what field members
are and where their responsibilities lie. As
institutionalists point out, organizations adopt
practices and structures in large part because
these are regarded as appropriate and legiti-
mate within their organizational field
(DiMaggio and Powell, 1983). Thus, attempts
to induce corporations to take on expanded
responsibilities, by social movements and
others, entail expanding field-level definitions
of the appropriate.
We focus on a particular episode that we
regard as a failed institutionalization project:
the effort to engage American multinationals
in the collective global battle against the
HIV/AIDS pandemic. This is a particularly
illuminating case for several reasons. The
AIDS pandemic is the largest public health
crisis in contemporary history, and the conse-
quences of inaction range from the highly
personal to problems of national security and
economic development. Unlike emergent
crises such as climate change, the scope of
the problem is manifest, and the death toll
already numbers in the millions, particularly
in sub-Saharan Africa. Many of the nations
facing the gravest problems are among the
poorest in the world, some nominally gov-
erned by ‘failed states.’ If ever there were a
problem requiring coordinated outside help
from the corporate sector, this was it.
American businesses were offered a rela-
tively low-cost vehicle sanctioned by the
United Nations to participate in the fight
against AIDS. In January 2001, Secretary
General Kofi Annan urged American busi-
nesses to join the Global Business Coalition
on HIV/AIDS (GBC), headed by former
American UN ambassador and investment
banker Richard Holbrooke. Annan framed
his appeal to align with prevalent American
conceptions of the corporation, highlighting
the benefits to shareholders and other con-
stituencies. Yet roughly 95% of the largest
American businesses declined, and those that
did join were a somewhat idiosyncratic
group. Why did some join, and most decline?
Our findings suggest that institutionaliza-
tion projects are analogous to efforts to build
a social movement (cf. Schneiberg and
Lounsbury, this volume). Successful institu-
tional entrepreneurs induce a critical mass to
adopt their definitions of appropriateness –
what kind of engine should an automobile
have (Rao, 2002), what activities should an
accounting firm do (Greenwood and
Suddaby, 2006), what are a company’s obli-
gations to the local non-profit community
(Marquis et al., 2007), or to gay and lesbian
employees (Scully and Creed, 2005), or to
citizens in need in other countries.
Fomenting a social movement follows a
similar dynamic, as institutional entrepre-
neurs (such as Kofi Annan) seek to change
a critical mass of actors’ conception of their
obligations – in this case, what a multina-
tional company can and should do
about HIV/AIDS. Some actors are prone to
joining a movement based on interests –
pharmaceutical companies, for instance,
have a clear stake in efforts to address
HIV/AIDS, and firms with substantial for-
eign sales receive a benefit in learning from
their peers. Others have already adopted a
conception of their obligations consistent
with the movement, making them easier to
recruit; in this case, those companies that had
benefits packages for domestic partners of
gay and lesbian employees were far more
likely to join than those that did not. But to
 SOCIAL MOVEMENTS AND FAILED INSTITUTIONALIZATION
achieve a critical mass, institutional and
movement entrepreneurs often need effective
recruitment networks. And while there was
clear evidence of network-based recruitment
in this instance, it was not sufficient to spread
beyond the ‘early adopters.’ Within five years
of Annan’s plea, only about two dozen mem-
bers of the Fortune 500 had joined the GBC.
That is, joining the global fight against
HIV/AIDS had not become institutionalized
as part of the standard package of what
MNCs do.
We next provide some background on the
parallels between organizational institution-
alism and social movement theory, and
recent efforts to integrate them. We then
describe the context of the corporate move-
ment against HIV/AIDS, and derive some
hypotheses about which companies are prone
to joining. We analyze data on a sample
of the several hundred largest US firms for
this decade, and conclude with some impli-
cations of our findings for organizational
institutionalism.
THEORETICAL BACKGROUND
In recent years there has been a notable con-
vergence in the agendas of those that study
organizations – particularly institutional the-
orists – and those that study social move-
ments. There are several reasons for this
convergence (Davis and Zald, 2005). First,
since both domains are concerned with the
sources of organized action, they are charac-
terized by similar processes and mecha-
nisms: founding, structuring, recruiting,
incentives, leadership, and culture are all
central concerns of both. While social move-
ments often come to be represented by
formal organizations, organizations have
come to be less formal, more permeable,
transient, and network-like (Davis and
McAdam, 2000). Second, both movements
and organizations have been transformed by
globalization and the advent of information
and communication technologies (ICTs),
373
including mobile phones, computers, and the
World Wide Web. The globalization of trade
and finance has been accompanied by the
growth of transnational movements and cor-
porations that are dispersed across national
boundaries. And, thanks to ICTs, both move-
ments and organizations are often character-
ized by nimble and relatively ad hoc alliances
assembled for particular performances.
Multinational quasi-firms can be assembled
for specific projects – a movie, a skyscraper,
a line of mobile phones – and broken up
when the project concludes. Similarly,
protest actions, such as those against the
WTO, typically comprise temporary
alliances among separate sponsors. Social
movements have become as global as corpo-
rations: six million protesters marched on the
same day in February 2003 behind the
banner ‘The World Says No to War’ in
dozens of cities on six continents in anticipa-
tion of the American invasion of Iraq, with
streaming video feeds of the action available
around the world via the Web. Finally, organ-
izations are often both the objects of social
movements – e.g., Nike (for its contractors’
labor practices), Nestlé (for its sales of infant
formula in impoverished countries lacking
clean water), Shell (for its operations in
repressive states); the sites of social move-
ments (such as efforts to gain equal employ-
ment rights), and participants in social
movements (Davis, McAdam, Scott, and
Zald, 2005). Corporations participate in
social movements both covertly (e.g., as fun-
ders for ‘social movement organizations’
intended to advocate for the firm’s agenda)
and overtly (e.g., through alliances, board
affiliations, and sponsorships).
The imagery of networks and contagion
are common to research on both institutions
and social movements (Strang and Soule,
1998). Networks provide a bridge between
individual and collective action: actors adopt
innovations, in part because those they are
connected to have done so, and potential
activists ‘adopt’ movement membership
largely via network ties. The nature of rele-
vant ties is quite variable. Networks created
374 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
by shared directors provide an infrastructure
for the spread of governance practices among
corporations (e.g., Davis and Greve, 1997),
organizational structures such as the multi-
divisional form (e.g., Palmer, Jennings, and
Zhou, 1993), and even choices about which
stock market to list on (Rao, Davis, and
Ward, 2000). Organizations are also linked
by professional networks, such as those cre-
ated by human resource managers and their
professional associations (Dobbin, Sutton,
Meyer, and Scott, 1993). At a more informal
level, organizations can be connected by net-
works of social activists; for instance,
gay/lesbian/bisexual/transgender (GLBT)
employee groups shared best practices and
tactics among their peers to advocate for
domestic partner health benefits at employers
across America (Scully and Creed, 2005).
Geographic proximity can create connec-
tions among organizations that are conse-
quential for corporate practice (e.g., Marquis,
2003). And organizations can also be con-
nected through more abstract ties, such as
social proximity (e.g., operating in the same
industry). Any of these connections can pro-
vide a substrate for contagion or cohesion for
the purposes of collective action.
Institutional theorists have drawn on
contagion imagery to unpack episodes
of widespread organizational change. The
prevalence of a practice or structure is typi-
cally taken as evidence for its legitimacy, and
thus a prod to further adoption. For example,
Tolbert and Zucker examined the spread of
municipal reform among American cities,
finding that later adopters evidently drew on
the prevalence of the reform as a sign of its
appropriateness. Fligstein (1990) described
how field-level changes in the rules of the
game – antitrust regulations limiting certain
types of horizontal and vertical mergers –
prompted firms to experiment with alterna-
tive strategies to achieve growth and stability,
enacted by CEOs with particular types of
functional background and training. Those
strategies that proved successful then spread
widely through mimicry, first within their
industry and later more broadly, leaving
behind a cadre of top executives with a par-
ticular kind of orientation. Edelman (1992)
described a similar dynamic in the context of
employment relations: in the wake of the
Civil Rights Acts of the 1960s, employers
experimented with alternative structures to
signify compliance with government require-
ments for equal employment opportunity.
Those that proved sufficient to ward off
legal challenge subsequently spread widely
through mimicry. Again, a concomitant of
the spread of equal employment offices was
the spread of equal employment officers –
professionals with a particular background
and training, sensitized to particular issues.
An implication of this discussion is that
networks are both a cause and a consequence
of contagion. Actors draw on existing net-
works (through shared directors, common
membership in professional or industry asso-
ciations, geographic proximity, and so on) to
make judgments about the appropriateness of
innovations, such as poison pills or GLBT
partner benefits. But episodes of contagion
can also end up creating networks of firms
that regard each other as models or peers.
American antitrust law created opportunities
for CEOs from a finance background; these
CEOs, in turn, promoted corporate strategies
of diversification. They acted, in effect, as
agents of a particular worldview, implanted
within organizations and oriented to the
actions of their peers. Similarly, employment
laws created opportunities for human
resource managers. Once in place, these
managers became oriented toward peer
groups (‘benchmarks’), and act as advocates
for new innovations in human resource man-
agement, such as maternity leave (Kelly and
Dobbin, 1999). It is as if, by hiring these pro-
fessionals, the organization had grown a new
sense organ that attuned it to particular types
of practice and structure.
Social movements can have a parallel
effect on corporate change. Zald, Morrill,
and Rao (2005) describe the various
processes by which social movements can
penetrate organizations. At the simplest level,
employees bring with them their social
 SOCIAL MOVEMENTS AND FAILED INSTITUTIONALIZATION
identities and priorities. Feminist executives
may be advocates for women-friendly corpo-
rate policies. Minority executives may
shape hiring and promotion policies in ways
consistent with an agenda of equality.
Scully and Creed (2005) document how net-
works of gay and lesbian activists formed
within and across companies to advocate for
gay-friendly corporate policies. Informal net-
works allowed activists in different companies
to compare notes on which tactics worked
and which did not. Moreover, the groups
could use each other’s experiences to docu-
ment the prevalence of particular practices
and thus advocate for them more effectively.
One of the most visible of these was the rel-
atively widespread adoption of domestic
partner benefits among large US corpora-
tions (Briscoe and Safford, 2007). Notably,
these networks among employee groups
were not neutral conduits for the spread of
information or norms among organizations –
they were channels for activism. And the
prevalence of a practice (such as domestic
partner benefits) was not simply a bench-
mark, but a tool for advocacy. Activists could
influence how information about best prac-
tices was brought into the organization and
used to guide the organization’s own policies
(Briscoe and Safford, 2007).
Thus, both institutional theory and social
movement theory draw on common images
and mechanisms for organizational change
(Davis et al., 2005). In this case, organizations
are connected at multiple levels by networks
among directors that serve on each others’
boards, executives bound by common training,
professionals connected through professional
associations, and activists organized via social
movements that cross organizational bound-
aries. Any of these can potentially provide a
channel for recruitment to a social movement.
But the process is not simply one of the dis-
semination of neutral information: recruitment
requires active engagement and advocacy.
We examine the implications of this
discussion of networks and change in the
context of a failed institutionalization proj-
ect: the effort to recruit corporations to a
375
collective fight against HIV/AIDS. The
several hundred largest US corporations can
be considered an organizational field, a group
of mutually-regarding actors that look to
each other for evidence of appropriate action
(Fligstein, 1990). They are connected more
or less densely at multiple levels by director
networks, professional networks, and activist
networks, among others. The extent that this
well-connected group adopts or fails to adopt
a practice is an apt indicator of its institution-
alization. In this case, the practice in question
is membership in a UN-sanctioned business
organization aimed at halting the spread of
HIV/AIDS. Prevalence of adoption of this
innovation stalled at about 5 percent, which
we take as a sign of failed institutionaliza-
tion. We first describe the context of the
AIDS epidemic and then consider the factors
that militate for or against joining the fight.
CONTEXT: CALL AND
(NON) RESPONSE
In remarks made on the eve of World AIDS
Day in 2004, UNAIDS Executive Director
Peter Piot characterized his news about
HIV/AIDS as both ‘sobering’ and ‘ominous.’
He explained that the number of people
living with HIV globally had grown to nearly
40 million and that in 2004 alone, approxi-
mately 5 million people became infected
with HIV and 3 million people died from
AIDS-related causes. He indicated that the
virus is perilously close to becoming a
‘raging epidemic’ in China, India and Russia
and that its spread in these places bears
alarming similarities to the situation in Africa
two decades ago, where it took five years for
HIV prevalence rates to move from 0.5 percent
to 1 percent but only seven more years for
such rates to jump from 1 percent to
20 percent. A 2004 report issued by the
World Economic Forum (WEF) echoed
Piot’s warning while adding warnings about
the economic consequences of the epidemic:
‘The AIDS epidemic is first and foremost a
376 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
human tragedy, but its magnitude also
derives profound social and structural
changes, leading to predictions of equally
profound economic damage º If effective
action is not taken to combat the spread of
this epidemic, HIV/AIDS could result in
[total] economic collapse’ (World Economic
Forum, 2004: 3). Eberstadt (2002) suggested
the following projections: a mild HIV epi-
demic would more than halve Russia and
China’s per person output growth between
2000 and 2025, while an intermediate epi-
demic would mean the predicted level of
output in Russia would be lower in 2025 than
2000, and in China barely higher. In India, a
mild epidemic would reduce output growth
by about two-fifths and an intermediate out-
break would reduce growth to zero.
Despite the alarming costs that have
already been incurred in sub-Saharan Africa
and those that could likely occur in three of
the world’s largest countries, the American
corporate sector’s reaction has been modest,
to put it mildly. A 2004 WEF Executive
Opinion Survey found that 50 percent of
American business executives believe that
HIV/AIDS will have some impact on their
business, yet only 7 percent of the executives
surveyed indicated that their company has a
written HIV/AIDS-specific policy and a
mere 6 percent expressed confidence that
their company’s current response to
HIV/AIDS was sufficient (Taylor, DeYoung,
and Boldrini, 2004). Executives acknowl-
edge that HIV/AIDS is a significant global
problem while simultaneously judging it not
so pressing as to require immediate steps.
Analysts at the WEF’s Global Health
Initiative suggest that this inactivity of the
American corporate sector reflects the fact
that firms lack appropriate information or
incentives, and that they are unable to assess
the risks they face as well as the potential
costs and benefits from successful action
(World Economic Forum, 2004).
In an effort to prod American business
executives into action, UN Secretary-General
Kofi Annan appeared before the US Chamber
of Commerce in January 2001 and implored
America’s business leaders to use their finan-
cial strength and influence to take increased
and decisive global action to address
HIV/AIDS:
I come to you, the leaders of American business,
representatives of one of the greatest forces in the
world, but one which has yet to be fully utilized in
the campaign against AIDS/HIV. It is high time we
tapped your strengths to the full º Business is
used to acting decisively and quickly. The same
cannot be said of the community of sovereign
states. We need your help – right now º Together,
I believe we can succeed – if only because the costs
of failure are simply too appalling to contemplate.
(Annan, 2001)
Annan asserted that multinational corpora-
tions are indispensable in the global fight
against HIV/AIDS. They have the resources
and skills that many failed states lack. As
such, Annan’s remarks were designed to
remind the leaders of the American corporate
sector that if they can flex their financial
might around the world, they need to be pre-
pared to similarly take decisive action in
times of crises. He framed his call to action
in business-friendly terms, emphasizing the
benefits to reputation, customer loyalty, and
shareholder value. Moreover, he endorsed
the Global Business Coalition on HIV/AIDS
(GBC) as the preferred vehicle for collective
action. Joining the GBC took only $25,000
(‘Less than a benefit table at the opera,’ as
GBC’s CEO Richard Holbrooke quipped),
and it provided tangible benefits and a visible
way to signal commitment to the fight
against HIV/AIDS.
A number of international business
coalitions have been formed for the purpose
of creating a forum for collective action
on HIV/AIDS. The first was created in
Thailand in 1993. The Thailand Business
Council on AIDS (TBCA) was founded by
two expatriate businessmen who noted that
many companies in and around Bangkok
were quite concerned about HIV/AIDS but
that none knew where to go for assistance in
the development and implementation of an
HIV/AIDS policy. The founders put up their
own seed money to start the TBCA, with
a mission of channeling the creativity
 SOCIAL MOVEMENTS AND FAILED INSTITUTIONALIZATION
and dynamism of business executives to for-
mulate solutions to resource, technical
and strategic planning problems in mounting
effective HIV/AIDS prevention and living
with AIDS programs (Thailand Business
Council on AIDS, 2000). The TBCA
was established as a membership organiza-
tion where each member firm pays a
membership fee commensurate with the
size of that firm and their level of commit-
ment to TBCA and AIDS prevention in gen-
eral. Within two years, the TBCA
membership had grown to 85 companies,
among them many large multinational firms
such as 3M, American International Group,
Bristol Myers Squibb, Colgate Palmolive,
General Motors, Kodak and Shell.
Membership now stands at approximately
120 firms.
Following the successful model of the
TBCA, the Global Business Council on
HIV & AIDS (GBC) was established in 1997
as a small peer-to-peer international advo-
cacy group with the purpose of promoting an
enlarged and enhanced business response to
HIV/AIDS. The four founding members –
Glaxo Wellcome (UK), Industrias Villares
(Brazil), MTV International (US) and Tata
Power (India) – formed the Council based on
a shared belief that the corporate sector was
not doing a fraction of what it could do to
address HIV/AIDS despite the fact that it is a
critical issue for every company precisely
because it has no boundaries: it penetrates
borders and threatens the world’s emerging
economies (Global Business Coalition on
HIV/AIDS, 2004). Levi-Strauss, Bristol
Myers Squibb and Merck had all joined the
Council by 2000, but for the first four years
of its existence, the number of members
remained low and the Council remained
more of a peer group than a full-fledged
organization. The importance of the Council
changed significantly during a 2001 United
Nations Session on HIV/AIDS. During the
session, the UN Security Council called on
the private sector to increase its engagement
of the epidemic. As part of that mandate, the
Security Council asked Richard Holbrooke,
377
former US Ambassador to the United
Nations, to take over as the President
and CEO of the GBC and turn it into the pri-
mary vehicle for mobilizing the global busi-
ness community. At that time, the Global
Business Council was renamed the Global
Business Coalition on HIV/AIDS to reflect
the new effort to become a more inclusive
organization with a more extensive corporate
membership base. Under the leadership of
Holbrooke, the GBC’s membership grew
from 17 in 2002 to more than 170 companies
in 2005.
The GBC describes itself as the preemi-
nent organization leading the business fight
against HIV/AIDS and defines its role as
working with global leaders in government,
business and civil society, to promote greater
partnerships in the global response to
HIV/AIDS and identify new, innovative
opportunities for the business sector to join
the growing global movement against
HIV/AIDS (Global Business Coalition on
HIV/AIDS, 2004). The Coalition charges the
same annual membership fee of $25,000 to
each member and the only expectation is that
members will participate in ways that best
suit them. The primary involvement of most
member companies is through industry-
related or issue-related project working
groups (e.g., the Biotechnology Working
Group and the AIDS Orphans and Vulnerable
Children Working Group); provision of
advice on relevant international issues of
importance to business; and sharing of best
practices, particularly regarding company-
wide HIV/AIDS policies. In addition, those
member companies specifically interested in
developing an internal corporate HIV/AIDS
policy utilize the GBC’s exclusive Business
AIDS Methodology™ (BAM). BAM is a
business-management model created for
the design and implementation of a cus-
tomized company response to HIV/AIDS.
Through an intensive process with GBC
experts, BAM results in a strategic, goal-
oriented action plan, tailormade to an individ-
ual company’s characteristics and core compe-
tencies. The variety of activities and services
378 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
notwithstanding, it is important to note that
some GBC members are involved only to the
extent that they pay the annual membership
fee, thereby adding their company’s reputa-
tion to the Coalition’s work (Global Business
Coalition on HIV/AIDS, 2004).
HYPOTHESES
We analyze the factors distinguishing those
American firms that joined the Global
Business Coalition on HIV/AIDS from
those that did not to understand the
institutional process behind corporate
(non)response to the pandemic. We are par-
ticularly interested in understanding the
social mechanisms – the ‘cogs and wheels’ –
that underlie corporate responses to the AIDS
epidemic (Hedstrom and Swedberg, 1998).
In doing so, we draw on institutional and
social movement theories broadly for a suite
of possible mechanisms.
Organizational institutionalism and social
movement theory provide complementary
ways of analyzing why firms would join the
GBC. For social movement researchers,
movements and social movement organiza-
tions such as the GBC are seen as special
cases of collective action. Any form of col-
lective action faces free rider problems – the
benefits of successful collective action are
shared widely, while the costs are borne by
the individuals that join in the effort. These
tendencies toward inaction are even more
pronounced among organizations than
among individuals: organizations are short-
term focused, prone to inertia, and respond to
problems that have already occurred rather
than to ‘predictable surprises’ that may
happen in the future (Cyert and March, 1963;
Bazerman and Watkins, 2004). The progno-
sis for corporate executives taking action
on problems whose consequences will be
felt on someone else’s watch – such as the
AIDS pandemic– is grim. Thus, movement
researchers focus on a combination of indi-
vidual and selective incentives for joining
(or avoiding) movements and on social
infrastructure, such as networks among
potential joiners.
Institutionalists, as we have seen, view
joining a movement as akin to the diffusion
of an innovation. Like social movement
researchers, they see networks as a potential
substrate for contagion, as organizations
facing uncertainty follow the example set by
their alters (DiMaggio and Powell, 1991).
Institutionalists also point to a central place
for identity– that answering the question:
‘What should I do in this situation?’ often fol-
lows from determining ‘Who am I, and what
does someone like me do?’ (DiMaggio and
Powell, 1991). In the hypotheses that follow,
we draw on each of these factors – incentives,
networks, and identity –to draw out implica-
tions of social movements and institutionalism
for which firms are likely to join the GBC.
Organizations that are larger and have better
performance face greater incentives to join the
fight against HIV/AIDS. First, large organiza-
tions are more visible to the public and there-
fore more likely to be the target of demands or
appeals (like that of Kofi Annan before the US
Chamber of Commerce) that emphasize their
responsibility to take action. Prior research
suggests that large organizations are more
likely to be the target of social movement
efforts than small organizations (Davis et al.,
2005). Moreover, large firms find it relatively
less costly to allocate resources to GBC mem-
bership fees and to develop and implement
HIV/AIDS policies. Second, theory on social
movements suggest that slack resources enable
more prospective collective action – in short,
the rich can take the offense, while the poor
must typically respond defensively (Tilly,
1978: ch. 3). In this context, superior organiza-
tional performance can create potential slack
resources for experimentation and innovation
that are unavailable to those with poor
performance. Thus:
Hypothesis 1: The larger a firm and the
better its performance, the more likely it is to
join the GBC.
Firms with more global operations also
have greater incentives to engage against
 SOCIAL MOVEMENTS AND FAILED INSTITUTIONALIZATION
the HIV/AIDS epidemic. Domestic firms
face rather limited exposure to the epidemic,
as the prevalence of HIV in the US is rela-
tively low by world standards. Companies
are expected to have increased exposure
to HIV/AIDS, to the extent that they sell
their products and services on a global scale.
As such, firms that have high levels of for-
eign sales are predicted to possess a more
acute understanding of the damage the
disease has wrought on both their employee
and customer bases, and thus greater
incentives to join in efforts to address it.
To that end, levels of foreign sales should
serve as a predictor for whether firms join
the GBC.
Hypothesis 2: The greater a firm’s sales
outside the US, the more likely it is to join
the GBC.
Certain key industries, such as the pharma-
ceutical industry, have critical business inter-
ests that draw them into the global effort to
address HIV/AIDS. American pharmaceutical
companies are among the leading producers of
drugs that reduce the amount of virus in a
HIV-positive patient’s blood and help to delay
the progress of disease. Yet American pharma-
ceutical companies have come under fire for
what AIDS activists and AIDS sufferers
(particularly the millions of African AIDS vic-
tims living in dire poverty) decry as impossibly
expensive drugs. The drug companies contend
that it is simply not feasible for them to reduce
drug prices because doing so would severely
undermine the research and development
efforts being undertaken to produce new
and potentially more effective drugs. Despite
international patent laws that prohibit such
action, African countries have sought less
expensive generic drugs manufactured prima-
rily in India. As a result of the continued battle
that pharmaceutical firms have found them-
selves in, it is expected that they would make
every effort to have a seat at the table of a pow-
erful advocacy group such as the GBC. It is
conceivable to imagine that, without the pres-
ence of pharmaceutical firms, the GBC might
support policies such as the global regulation
of drug prices. Therefore, membership in the
379
GBC appears congruent with resource depend-
ence theory’s prediction that firms will take
action to safeguard their key exchange
relationships (Pfeffer & Salancik, 1978).
In addition, institutionalists point to the
importance of responding to external evalua-
tors, such as activists and governments in
stricken countries, with symbolic displays of
good faith (Meyer and Rowan, 1977).
Although such displays may be de-coupled
from the organization’s actual operations, they
serve an important institutional function in
establishing the firms’ social fitness – and
potentially warding off more intrusive
interventions.
Hypothesis 3: Pharmaceutical firms will
be more likely to join the GBC than firms in
other industries.
Not all such organizational changes are
purely symbolic, of course. Organizations
may establish offices or policies as displays
of good faith, yet they may subsequently
find that the symbol becomes a reality.
A firm’s internal policies can create
employee constituencies that make the firm
more attentive and responsive to certain
social circumstances. The research by Sutton
et al. (1994) and Sutton and Dobbin (1996)
shows that the establishment of personnel,
benefits and Equal Employment Opportunity
offices created constituencies within firms
that actively promoted practices advocated
by their professional networks. A specific
example is offered by Kelly and Dobbin
(1999), who found that firms with benefits
offices were more likely subsequently to
create formal maternity leave policies. That
is, the establishment of human resource
offices – whatever the initial intention –
connected firms into professional networks
that conditioned their responses to subse-
quent innovations.
In a similar vein, HR policies related to
domestic partner benefits may both result
from and strengthen supportive constituen-
cies for taking corporate action against
HIV/AIDS within the organization. Briscoe
and Safford (2007) document that domestic
partner benefits were a major target of
380 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
activism by GLBT employee groups in
corporate America during the second half of
the 1990s and the first half of the 2000s.
Thus, 93 percent of firms with formal GLBT
employee groups adopted domestic partner
benefits during this time, compared to 41
percent of firms without such groups. We
anticipate that firms in the vanguard of HR
policies recognizing same-sex partnerships
are likely to attract employees who are more
attentive to the global HIV/AIDS epidemic
and more likely to press for a proactive
corporate response.
Hypothesis 4: Firms with more progressive
HR policies for gay employees will be more
likely to join the GBC.
Viewing a firm’s GBC membership as akin
to the adoption of a particular corporate prac-
tice suggests an analogy with other forms of
institutional diffusion. Davis and Greve
(1997), for instance, found that when a com-
pany’s directors served on the boards of other
firms that had already adopted a poison pill,
these directors were able to evaluate and even
promote adoption. Thus, as more of one’s
contacts adopt, adoption may come to be
seen as normatively appropriate. Such conta-
gion processes are also characteristic of
social activism: McAdam (1986) found that
college students were more likely to partici-
pate in high-risk activism– specifically,
joining the 1964 Freedom Summer project –
when they had friends that were also
participating. McAdam found that a strong
ideological identification with the civil rights
movement could encourage action, but that
the major factor distinguishing those that
joined Freedom Summer and those that sat it
out was having a friend that had joined.
Similarly, we expect that firms which share a
director with an existing member of the GBC
will be more prone to this particular form of
corporate activism: directors can spread the
‘innovation’ of GBC membership from board
to board.
Hypothesis 5: Firms will be more likely to
join the GBC to the extent that they share
directors with other firms that are members
of the GBC.
DATA AND METHOD
We chose as our sampling frame the 2003
Fortune 500, that is, the largest 500 firms in
the US by revenues. We excluded commer-
cial banks and firms that were not publicly
traded because certain measures (revenues,
market capitalization, board membership)
are either not comparable or not available for
these firms. Our final sample consisted of
413 firms.
Our dependent variable was membership
in the Global Business Coalition by 2004.
Although there are a number of ways one
might operationalize corporate responses to
AIDS, membership in the GBC has several
advantages as an indicator: it is unambigu-
ous, non-trivial, and has the sanction of the
United Nations. As of mid-2004, the GBC
had 150 members, of which 76 were US-
based firms and 23 were included in the
Fortune 500.
Our independent measures came from sev-
eral sources. Our measure of size (number of
employees) and performance (the market-to-
book ratio, that is, [market capitalization at
fiscal year end]/[book value of shareholders’
equity]) came from Compact Disclosure.
Foreign sales, calculated as the ratio of non-
US sales to total sales for 2002 (or for the
most recent available year), came from the
geographic segment file of Compustat. Firms
were classified as pharmaceutical companies
if their primary three-digit SIC code was 283.
For progressive HR policies, we drew on the
Human Rights Campaign’s WorkNet data-
base (2004). Specifically, we used an indica-
tor variable equaling one if the firm made
domestic partner benefits available to gay
and lesbian employees and zero otherwise,
according to HRC’s WorkNet. (Domestic
partner benefits are health insurance and
other benefits equivalent to those available to
married heterosexual employees.)
We constructed our board interlock
measure using board data for all firms traded
on Nasdaq and the New York Stock
Exchange in 2000. This sample included
47,349 directors serving on the boards of
 SOCIAL MOVEMENTS AND FAILED INSTITUTIONALIZATION
5,627 corporate boards. Board membership
data were carefully cleaned to identify over-
laps in which the same individual served on
two or more boards. All firms in this
expanded group were coded for membership
in the GBC. Because several hundred non-
US firms are traded on these two markets, we
included their data when calculating ties to
GBC members. Our measure is a count of the
number of other NYSE- or Nasdaq-traded
firms with which a focal firm shared a direc-
tor that were members of the GBC. Note that
while only 23 Fortune 500 firms were mem-
bers of the GBC, more than one-third of our
Fortune 500 sample shared at least one
director with a GBC member (either US or
foreign).
We analyzed the data using logistic regres-
sion, with the dependent variable being
membership in the GBC, as of 2004. Ideally,
we would include a time-series model of
membership, but because it is still a rela-
tively rare event, we would lack sufficient
statistical power to draw any inferences.
RESULTS
Descriptive statistics are reported in
Table 14.1. The means show that member-
ship in the GBC is somewhat rare, in spite of
the fact that the GBC is perhaps the world’s
most influential business coalition address-
ing the AIDS epidemic. Yet board-level ties
to GBC members are relatively widespread:
more than one-third of the firms in our
sample share a director with a GBC member,
Table 14.1 Descriptive statistics and correlation matrix for Fortune 500 firms
Variable
1. GBC membership
2. Employees
3. Market-to-book value
4. Foreign sales %
5. Board interlock with existing GBC member
6. Pharmaceutical company
7. Domestic partner health benefits
381
and some firms share directors with up
to seven other members (e.g., Xerox). We
also see that domestic partner benefits are
more prevalent among large firms than one
might have anticipated. Correlations among
the independent variables are generally
modest, with the notable exception of the
correlation between domestic partner bene-
fits and ties to GBC members, which is cor-
related at 0.25.
Table 14.2 shows the results of the logistic
regression analysis. The results offer little sup-
port for Hypothesis 1, as there was no signifi-
cant relation between size (measured as
employees or, alternatively, as annual sales)
or performance (market/book) and firms’
propensity to join the GBC. In contrast, we
find a significant positive relation between
foreign sales and GBC membership, consistent
with Hypothesis 2. On average, GBC member
firms derived 37 percent of their sales from
outside the US, compared with an average
of less than 20 percent for non-members.
Pharmaceutical companies were far more
likely to join the GBC than other firms,
consistent with Hypothesis 3: the coefficient
implies that pharmaceutical companies are
6.7 times as likely to be members of the GBC
as firms in other industries. As predicted
by Hypothesis 4, firms with domestic partner
benefits were almost five times as likely
to be members of the GBC as firms without
such policies. Interestingly, similar effects
were also observed when we used a more
diffuse measure of ‘diversity-friendliness’ in
HR policies, using the KLD Database’s
Diversity Strengths measure instead of HRC’s
WorkNet data on companies with domestic
Mean 1 2 3 4 5 6
0.05
17.37 −0.01
2.84 0.15 −0.03
19.92 0.18 0.02 0.19
0.68 0.28 0.02 0.11 0.12
0.02 0.28 −0.01 0.21 0.12 0.09
0.45 0.20 −0.04 0.09 0.06 0.25 0.16
382 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Table 14.2 Logistic regression: factors
distinguishing Fortune 500 firms that joined
the global business coalition on HIV/AIDS
Variable Coeff. z
Employees 0.00 −0.02
Market-to-book value 0.04 0.47
Foreign sales % 0.04* 2.81
Board interlock with existing
GBC member 0.50* 3.66
Pharmaceutical company 1.91* 2.20
Domestic partner health benefits 1.58* 2.36
Constant −5.92 −7.28
* p < .05 (two-tailed).
partner benefits. And lastly, we found that ties
to other firms that were GBC members had a
strong effect. Specifically, each board interlock
with a GBC member increased a firm’s likeli-
hood of being a member by 64 percent.
Two of our findings stood out as somewhat
surprising from the perspective of the tradi-
tional literature on corporate social responsi-
bility (e.g., Margolis and Walsh, 2001). First,
firms with progressive HR policies on diver-
sity, both generally and specific to gay and
lesbian employees, were significantly more
likely to be involved in the GBC. There are
at least two possible interpretations of this
finding: such firms may have a culture more
attuned to issues of social responsibility, and
thus find activism around the AIDS epidemic
to be a natural response, or they may have
internal constituencies that argue in favor of
external responsiveness. Edelman (1992) and
Kelly and Dobbin (1999) find that firms cre-
ating HR offices in response to the Civil
Rights Acts of the mid-1960s – sometimes as
a cynical effort to ward off potential litiga-
tion – end up building internal constituencies
for progressive HR policies, and later find
themselves being in the forefront of adopting
policies such as paid maternity leave. By the
same token, it is possible that firms with pro-
gressive diversity policies developed internal
constituencies attuned to the AIDS epidemic.
Indeed, an interview we conducted with the
officer in charge of one multinational firm’s
award-winning AIDS program in Africa
revealed that the program originated in one
US-based mid-level manager’s championing
of the program.
Second, we found a strong and consistent
relation between being a member of the GBC
and board-level ties to other GBC members.
Figure 14.1 shows this graphically (including
ties to non-US firms traded on Nasdaq
and NYSE that are GBC members). Our
finding parallels McAdam’s (1986) study of
Freedom Summer: while moral commit-
ments may shape responsiveness to calls for
activism, social connections to other activists
may have a more direct effect. We also note a
somewhat surprising connection: every
Fortune 500 firm with an African-American
CEO (American Express, Fannie Mae,
Merrill Lynch, and Time Warner) was a
member of the GBC in 2004, as were almost
all the firms whose board these CEOs served
on. (Fannie Mae’s Franklin Raines served on
the boards of Pepsico, Pfizer, and Time
Warner; Time Warner’s Richard Parsons
served on the boards of Citigroup and Estee
Lauder; in contrast, GM, whose board Merill
Lynch’s Stanley O’Neal served on, was not a
member, nor was IBM, where AmEx’s
Kenneth Chenault served). Moreover, GM
subsequently joined the GBC, while Fannie
Mae left the GBC after the departure of its
African-American CEO. This intriguing
observation suggests a source of social
responsiveness unexpected in the traditional
literature.
DISCUSSION
We framed our discussion of American cor-
porations joining the global fight against
HIV/AIDS as an instance of failed institu-
tionalization. Speaking to an audience of
America’s top business leaders, UNAIDS
Executive Director Peter Piot (2004)
declared, ‘[You] have a special role. [You]
are the only [ones] whose leadership can
move the world – not just with funding – but
with the influence it takes to keep AIDS high
on the international agenda.’ He then posed
 SOCIAL MOVEMENTS AND FAILED INSTITUTIONALIZATION 383

Company has
PLACER DOME INC “Progressive Gay/Lesbian
VIACOM INC
Employment Practices”
LAFARGE CORP
TOTAL FINA ELF SA ABBOTT LABORATORIES
AMERICAN EXPRESS CO

DAIMLERCHRYSLER AG
UNILEVER PLC
COCA COLA CO
MERCK & CO INC
BRISTOL MYERS SQUIBB CO
BPAMOCO PLC
SBC COMMUNICATIONS INC
HEWLETT PACKARD CO

EXXON MOBIL CORP

CHEVRON CORP
FEDEX CORP DIAGEOPLC
PHILIP MORRIS COS INC
MICROSOFT CORP PEPSICO INC
RIO TINTO PLC
TIME WARNER INC NEW

FANNIE MAE CITIGROUP INC NIKE INC GLAXO WELLCOME PLC

ESTEE LAUDER COS INC
PFIZER INC
MERRILL LYNCH & CO INC

JOHNSON& JOHNSON

Figure 14.1 Board ties among GBC members

to them the question that forms the founda-
tion of this research effort, ‘We are clearly at
a crossroads in the global fight, which path
will [you] take?’ (Piot, 2004: 7–8). Piot’s
comments underscore the critical question
that US business leaders find themselves
facing: is it worth the investment of their
companies to engage in the global fight
against HIV/AIDS? (Nattrass, Neilson, Bery,
Mistry, and Sievers, 2004). In the event, the
large majority answered: No.
Our results indicate what factors distin-
guished the handful of firms that did join the
GBC from those that did not. Membership
in the Global Business Coalition on
HIV/AIDS serves as a valuable measure of
action, as the GBC has emerged over the past
few years as the world’s most influential
business coalition addressing the epidemic,
offering member corporations a wide range
of ways to become involved and connecting
them to many, if not all, of the leading
corporate and public sector actors active in
the fight against HIV/AIDS. Moreover,
membership was cheap, and thus set a rela-
tively low threshold for ‘corporate activism.’
Yet the results suggest that incentives were
not the deciding factor: bigger firms, and
those with better performance, were no
more prone to join the GBC than small firms
with poor performance. Evidently the cost
of membership was not a significant hurdle
for firms of this size. Pharmaceutical firms
were far more likely than others to join,
but this result is potentially ambiguous.
Pharmaceutical firms have economic incen-
tives to claim a place at the table when
it comes to AIDS policies, and they also
have reasons to signal their good faith to
outside evaluators by joining in efforts to
combat the disease (cf. Meyer and Rowan,
1977). But they have less cynical reasons
to join as well, based on their identity as
health providers. With only archival data,
it is impossible for us to disentangle these
alternative interpretations.
384 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Similarly, firms with greater foreign sales
were more prone to join the GBC than
domestically-oriented companies. Again, this
may be because such firms had greater selec-
tive incentives to join (because membership
gave them access to tools for constructing their
own policies for overseas facilities), or because
such firms were more aware from first-hand
experience of the impact of the epidemic.
More intriguing are our results on net-
work factors associated with membership.
Research on social movements and on orga-
nizational institutionalism both highlight the
central place of social networks in processes
of change. Organizations look to their peers
and competitors to determine what is appro-
priate in a given context, and to answer the
question ‘What does someone like me do in
this situation?’ (DiMaggio and Powell,
1991). Social movement participants can act
as evangelists, recruiting their friends and
colleagues to participation. In this case, Kofi
Annan and others were seeking to build a
social movement among corporations, to
change the definition of what a corporation’s
obligations are with respect to the global
fight against the AIDS epidemic.
We examined two types of networks that
might serve as a basis for legitimation and
recruitment to the GBC. First, organizations
that have adopted domestic partner benefits
often share a connection through employee
activist networks. About 45 percent of the large
US corporations in our sample offered such
benefits, and prior work suggests that such
firms are connected by informal interorganiza-
tional networks of employees; indeed, such
networks were in part the basis of advocacy for
these benefits (Briscoe and Safford, 2007;
Scully and Creed, 2005). But while firms with
such benefits were more likely to join the
GBC than those without, we saw little evi-
dence of contagion, as only a relatively tiny
proportion of firms with domestic partner ben-
efits joined the GBC. This suggests that the
inter-organizational network facilitating
human resource policies was not activated
for recruitment to the GBC. Rather, the find-
ings indicate that firm-level features made
organizations with partner benefits more
receptive to the call to join. By virtue of taking
a progressive step regarding gay-friendly HR
policies, a firm is likely to attract employees
who are generally more attentive to certain
social causes, specifically AIDS-related issues,
who might then act as internal advocates for
the GBC.
In contrast, we find that network ties
through boards of directors were a relatively
potent source of recruitment – with some
qualifications. This parallels the board-based
contagion process of other practices and
structures that came to be widespread (e.g.,
the poison pill and the creation of investor
relations offices, both of which came to be
standard practice among corporations). But
in this case, adoption stalled at only about
5 percent, as GBC membership failed to
become institutionalized. An unexpected
finding may help explain this. We discovered
that every Fortune 500 firm with an African-
American CEO (of which there were four at
the time of our analysis, of whom only one
remains) was a member of the GBC, and
almost every board that these CEOs served
on was a member of the GBC. It seems clear
that the actions of some firms – such as
Fannie Mae, whose business consists prima-
rily in securitizing American home mort-
gages – did not result from a direct pecuniary
interest in stemming the AIDS pandemic,
particularly given that they do essentially no
business in the hardest-hit nations. Rather,
their responsiveness to the call to action evi-
dently resulted from other motivations. This
is not trivial: four black CEOs collectively
served on the boards of over one-third of the
GBC’s American members, and almost half
the GBC’s US members shared directors
with the firms these four ran.
This finding indicates an alternative fram-
ing of the question that we began with.
Rather than asking: ‘Why did US corpora-
tions join the global fight against AIDS?’, we
might instead ask ‘Why did most US corpo-
rations fail to join the fight?’ The early
adopters were largely distinguished by a
small number of factors: either they had
 SOCIAL MOVEMENTS AND FAILED INSTITUTIONALIZATION
direct business interests in the fight against
AIDS (pharmaceutical companies, multina-
tionals doing substantial business in Africa)
or they had board ties to the four large firms
run by African-American CEOs at the time
(American Express, Fannie Mae, Merrill
Lynch, Time Warner). Although speculative,
this suggests that recruitment based on net-
works (rather than incentives) spread only as
far as the reach of these four firms. Had the
directors of these first-degree contacts acted
as evangelists, recruiting the other firms
whose boards they served on in turn, it is
possible that GBC membership would have
reached a critical mass of prevalence suffi-
cient to legitimate it as part of the standard
package of what US corporations do.
In short, it would have become institutional-
ized, an appropriate response to corporate
America’s collective corporate social respon-
sibility toward world health. Instead, we
found that most corporations abstained,
either due to inertia, a lack of incentives, or
the (accurate) perception that most of the
damage would be felt on someone else’s
watch.
We recognize that there are limitations in
our approach that prevented us from captur-
ing a company’s full involvement in the fight
against HIV/AIDS. For data analysis conven-
ience, we used a gross dependent variable,
namely ‘GBC member’ or ‘not a GBC
member’ to assess Fortune 500 firms’
involvement. Ideally, we would like to know
more about the specific details of each
Fortune 500 firms’ HIV/AIDS programs and
policies. Cursory analysis of the GBC mem-
bers’ respective HIV/AIDS programs seems
to indicate quite a variance in regards to how
different companies are engaged in fighting
the global epidemic. One potential way to
analyze the differences in GBC members’
HIV/AIDS programs would be to conduct
research along the lines of Westphal, Gulati
and Shortell’s (1997) analysis of firms’ adop-
tion of TQM practices. Their work demon-
strated that early and later adopters of TQM
differed in how they employed TQM prac-
tices within their companies. It might be
385
equally interesting to examine whether there
is a substantive difference in the HIV/AIDS
programs of those Fortune 500 firms who
joined the GBC early, as compared to those
who joined later. The primary impediment in
conducting such an analysis at this point is
that there is little uniformity in the way that
companies report their HIV/AIDS programs.
Future research would do well to explore this
in more detail.
CONCLUSION
We argued at the outset that organizational
institutionalism and social movement theory
offered complementary insights into explain-
ing failed institutionalization. Organizational
insititutionalists seek to understand how
practices and structures come to be accepted
and even taken for granted: why do all
large American corporations have someone
with a title ‘Chief Executive Officer;’ almost
all have investor relations offices and
Chief Financial Officers; and a large majority
have poison pills and golden parachutes?
This question can be extended to issues of
social responsibility: why do so many com-
panies headquartered in Minneapolis support
local non-profit arts organizations, while
those in Columbus, Ohio support child
welfare, and those in Orange County,
California provide little support to any
non-profits (Marquis et al., 2007)? The
answer turns on field-level processes of defi-
nition and re-definition, where the preva-
lence of a practice serves as an indicator of
legitimacy and a spur to further adoption.
Successful institutionalization projects are
those in which a practice becomes suffi-
ciently widespread that it becomes accept-
able and even obvious. Social movement
theory focuses on similar dynamics to
explain the prevalence of activism and social
change. In the corporate sector, for instance,
activists sought to make domestic partner
benefits for GLBT employees acceptable and
even obligatory.
386 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
No such process occurred for responses
to the AIDS epidemic. Given a low-cost
opportunity to engage in collective action
aimed at addressing the worst public health
crisis in recent history through the GBC,
the vast majority of American corporations
took a pass. Perhaps their incentives were
too weak – yet most surveyed executives
themselves regard their own corporate
policies as inadequate to address HIV/AIDS.
Moreover, many of the firms that did join
the effort did little or no business in sub-
Saharan Africa, where the greatest need is
felt. Pharmaceutical and oil companies
have clear incentives to join the conversa-
tion based on their business interests, but
why mortgage companies and financial
services firms?
Our results indicate that collective action
failed to reach critical mass and thus to
achieve a taken-for-granted status. Some cor-
porations joined because of their immediate
economic interest. Others evidently joined
because they employed individuals with a
rooting interest in the cause, or were
recruited through ties to such activists. But in
the end, the numbers were not sufficient to
reach a tipping point in which joining the
coalition was the sanctioned means of
addressing the HIV/AIDS crisis. Prior
research on corporate change indicates that
practices that were initially highly controver-
sial can come to be legitimated and wide-
spread through the observed prevalence of
the practice (e.g., Davis and Greve, 1997).
Ironically, our examination suggests that
failure to achieve some level of prevalence
can undermine the spread of practices that
should be utterly uncontroversial, and even
mandatory.
ACKNOWLEDGMENT
We would like to thank the Center for Advancing
Research and Solutions for Society (CARSS) at the
University of Michigan for their support of this
project.
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Institutions and Corporate
Governance
From its inception, the institutional
tradition of studying organizations has
been informed by themes of control and
coordination – themes that fall within the
domain of corporate governance, broadly
defined as being concerned with the implicit
and explicit relationships between the corpo-
ration and its constituents, as well as the rela-
tionships between these constituent groups
(Bradley, Schipani, Sundaram, and Walsh,
1999). With its insights into the nature of
authority and control structures, institutional
theory is uniquely positioned to provide
important contributions to scholarship on
corporate governance. However, the reverse
is also true: because of its concerns with the
control of the corporation, corporate gover-
nance presents a particularly attractive field
for institutional theory and an opportunity to
clarify and refine it.
While questions about corporate control go
back to the emergence of the publicly owned
corporations as a form of organization (Berle
and Means, 1932), the literature on corporate
governance presents a somewhat more recent
phenomenon, establishing itself as a distinct
15
Peer C. Fiss
field of research only in the late 1970s. Since
then, traditional scholarship on corporate gov-
ernance has been largely dominated by a legal-
economic view of the firm as a nexus of
contracts (e.g. Jensen and Meckling, 1976;
Fama and Jensen, 1983; Hart, 1995). This
approach has placed the principal-agency
problems at the center of most researchers’
concerns, and the result has been a rather
narrow conception of corporate governance as
concerning primarily the relationship between
shareholders and managers (e.g. Rubach and
Sebora, 1998; Shleifer and Vishny, 1997: 737).
The main thrust of this body of research has
accordingly been to investigate the optimal
contracts between shareholders and managers
(Fama and Jensen, 1983; Eisenhardt, 1989),
and has resulted in a large body of research that
addresses a variety of incentive mechanisms to
control the behavior of managers, focusing
mostly on compensation, the composition of
the board of directors, and the market for cor-
porate control as the three primary control
issues (see e.g. Blair, 1995; Shleifer and
Vishny 1997; Walsh and Seward, 1990;
Zingales, 1998 for reviews of this literature).
390 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Although the contractarian view clearly
emerged as the dominant paradigm of corpo-
rate governance research since the 1980s,
some recent research has begun to move away
from this focus on the effectiveness of individ-
ual mechanisms and has started to take a more
holistic view of the corporate governance
system as a configuration of interdependent
elements (e.g. Beatty and Zajac, 1994; Davis
and Useem, 2002). Such a view also empha-
sizes that corporate governance systems them-
selves are embedded in larger institutional and
legal frameworks, and that effective practices
are highly contingent on the institutional
environment in which corporations and their
stakeholders are embedded (e.g. Davis and
Useem, 2002). Emerging from the foundational
work of Coase (1937), the new institutional
economics of North (1990, 2005) and
Williamson (1981, 1988) have offered frame-
works regarding the role of institutions in cor-
porate governance that are rooted in a
boundedly rational actor model of the corpora-
tion. For example, North (1990) argues that a
national system of corporate governance may
be seen as an institutional matrix that provides
both the roles to the players and the goals to be
pursued by the corporation. Similarly,
Williamson (2000) acknowledges the embed-
dedness of corporate governance arrangements
in larger, society-wide systems of institutions.
Given several comprehensive and insightful
reviews of the contractarian approach to corpo-
rate governance (see e.g. Eggertsson, 1990;
Furubotn and Richter, 1997; Menard and
Shirley, 2005; but also Fligstein and Choo,
2005; Fligstein, 2001; Davis, 2005), in this
chapter I will focus relatively more on the con-
tributions of sociological institutionalism to
the study of corporate governance. In doing so,
I will examine corporate governance using a
socially informed view of actors and corpora-
tions as deeply enmeshed in systems of norms
and relations that are both culturally and socio-
politically constructed. My goal in this chapter
is thus to present an alternative account of how
corporate governance may be studied using the
tools of sociological institutionalism, to survey
how institutional theory has so far contributed
to the study of corporate governance, and to
examine a number of fruitful areas for further
inquiry, such as the study of contrasting
national governance systems, governance
in emerging economies, and the effect of
globalization.
AN INSTITUTIONAL APPROACH TO
CORPORATE GOVERNANCE
To accomplish the task of outlining an insti-
tutional approach to corporate governance,
a few clarifications are in order. The first
of these concerns the role of power in
institutional accounts. Earlier forms of insti-
tutional theory have been criticized for their
relative inattention to themes of power and
domination (e.g. Perrow, 1985; Clegg, 1989).
Since power relations lie at the heart of cor-
porate governance, such criticism is of
importance and needs to be addressed. In
response to it, I will follow prior work that
has viewed institutions as inherently about
the role of power (Stinchcombe, 1968: 107),
and institutionalization as a process that is
innately political, reflecting the relative
power and interests of coalitions of actors
(DiMaggio, 1988). Such an approach places
issues of power and control squarely at
the center of its attention, considering
governance systems as reflecting underlying
cultural narratives or moral orders that
define how social relations should be
constructed and whose interests have
priority (Wuthnow, 1987). These moral
orders thus form the foundation of gover-
nance systems and are expressed in the
ways in which power and influence work.
The view presented here furthermore
necessarily implies that we need to pay
attention to both sides of the power relation-
ship, including both obedience to power
and resistance to it (e.g. Clegg, 1989). It
thus points to the potential of institutional
theory to offer a critique of existing power
arrangements (Lawrence and Suddaby,
2005). In this sense, I will focus both on the
 INSTITUTIONS AND CORPORATE GOVERNANCE
enactment and acceptance of institutions as
well as on forms of resistance to institutions,
particularly in relation to the actual enact-
ment of institutional orders in governance
(cf. Davis, 2005).
Second, an institutional view of corporate
governance needs to start with a clear under-
standing of the nature of governance arrange-
ments. As noted earlier, the standard view of
corporate governance rooted in the economic
and legal traditions places the defense of the
shareholders’ interests at its center (Shleifer
and Vishny, 1997; Tirole, 2001). Its associated
scholarship considers governance arrange-
ments as emerging from the distribution of
property rights and based on two fundamental
assumptions. The first holds that shareholders –
as the ‘residual risk bearers’ of the corpora-
tion – are the only stakeholder group that is
not compensated by contract. Within financial
economics, this view of shareholders alone
bearing the risk of corporate failure is so
widely spread as to be taken as self-evident
(O’Sullivan, 2000). The second assumption is
that holding managers accountable only to
shareholders will result in the most efficient
aggregate social welfare outcome. It follows
from this assumption that the best governance
system for all stakeholders is to exclude all
constituents except shareholders from the
governance of the corporation (Hansmann and
Kraakman, 2001: 441).
In contrast, an institutional approach to cor-
porate governance suggests that corporate gov-
ernance arrangements always reflect political
processes (Cyert and March, 1963; Davis and
Thompson, 1994) and as such do not naturally
arise out of an order of property rights. Instead,
I believe that governance models are better
understood as containing implicit and explic-
itly normative theories or logics about the
distribution of power and the ‘natural’ order
of interests in the corporation. In other words,
governance models are articulated systems
of meaning that embody the moral order as
they explain and justify the proper allocation
of power and resources. This view of gover-
nance models goes back to the work of
Reinhard Bendix, who understood managerial
391
ideologies to be ‘all ideas which are espoused
by or for those who seek authority in economic
enterprises, and which seek to explain and jus-
tify that authority’ (1956: 2). By emphasizing
the symbolic nature and cultural embedded-
ness of corporate governance models, the view
advanced here likewise builds on recent work
on the role of institutional logics, defined as
‘the axial principles of organization and action
based on cultural discourses and material prac-
tices prevalent in different institutional or soci-
etal sectors’ (Thornton, 2004: 2). The logics
that underlie corporate governance models
thus refer to and emerge from the wider cul-
tural belief and rule systems that structure cog-
nition and guide decision-making (Wuthnow,
1987; Lounsbury, 2007). As such, governance
models are similar to conceptions of control
(Fligstein, 1990; 2001) in that they refer to
local orders that provide actors with cognitive
frames to interpret the actions of others as well
as their own.
The view of corporate governance models
presented here is much more dynamic and
culturally constructed than that employed in
the contractual tradition. It also differs from
the contractual approach by highlighting
issues of power and contestation, and partic-
ularly resistance to governance models.
Rather than being rigid structures, gover-
nance models are symbolic orders that
require constant tending to be maintained.
Such an approach thus also speaks to a
common theme in the institutional literature,
namely questions of why and how institu-
tional change comes about where existing
institutional arrangements become replaced
with alternative orders.
There are several reasons why governance
models and their underlying normative claims
are more fragile and vulnerable to alternative
theories than usually assumed. First, as is true
for all systems of institutional order, the mean-
ing embodied by governance models is inher-
ently unstable, as the very symbols that are
their building blocks tend to be open to differ-
ent interpretations that may empower different
actors. Sewell (1992) refers to one aspect
of this as the ‘transposability of schemas,’
392 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
suggesting that culturally learned rules and
assumptions ‘can be applied to a wide and not
fully predictable range of cases outside the
context in which they are initially learned’
(1992: 17). This is particularly true when gov-
ernance models and practices are applied
across institutional contexts. Similarly, exist-
ing institutional settlements are built on the
remains of previously contending alternatives,
many of which remain available as differing
models of organizing. As a result, the hege-
mony of governance models is intrinsically
unstable and constantly threatened, either by
the memories of prior social orders
(Schneiberg, 2006), by alternative versions of
what could be (Comaroff and Comaroff,
1991), or by contradictions within the current
orders (Clemens, 1997).
Furthermore, existing models have to be
passed on, either through reproduction and
socialization or through conversion of new
members. However, transmission is problem-
atic, because many socialization processes
remain far from complete (Zucker, 1977). As
a result, social systems in general, and sys-
tems of normative claims in particular, tend to
suffer from ‘social entropy’ (Zucker, 1988),
with a gradual erosion of the accepted beliefs
and assumptions on which the models them-
selves are based, opening the door for chal-
lengers such as the shareholder-oriented
model that replaced the traditional managerial
model of governance (e.g. Fligstein, 1990;
Lazonick and O’Sullivan, 2001; Dore, 2000).
Finally, governance models are vulnerable to
technical and economic changes that result in
discrepancies between actual experience and
explanation offered by the normative narrative
embodied in them (e.g. Goodrick, Meindl, and
Flood, 1997). Such techno-economic changes
may open up performance gaps (Abrahamson,
1996), thereby creating opportunities for chal-
lengers to step in and offer alternative explana-
tions and ways of organizing. In this regard,
Barley and Kunda (1992) have shown that the
ebb and flow of managerial ideologies is
related to broad cycles of economic expansion
and contraction, leading to alternating waves
of rational and normative rhetorics of control.
Likewise, many of the current claims about the
superiority of the shareholder-oriented model
of the corporation point to the performance
gaps between the presumably superior model
and more traditional, stakeholder-oriented
models (e.g. Hansmann and Kraakman, 2001;
Bradley et al., 1999).
The view of governance models presented
here also speaks to another central concern in
institutional theory, namely the relationship
between taken-for-grantedness and purpo-
sive agency (Colyvas and Powell, 2006).
Building on the work of Comaroff and
Comaroff (1991), it suggests a continuum of
governance practices that ranges from the
salient and openly contested to the taken-for-
granted and therefore uncontested assump-
tions about the governance of corporations.
Taken-for-grantedness refers to those aspects
of the corporate governance world that ‘... go
without saying, because, being axiomatic,
they come without saying’ (Comaroff and
Comaroff, 1991: 23). However, due to the
mutability of meaning systems and inherent
contradictions, even highly legitimated gov-
ernance models may become subject to chal-
lenges, and it may thus be better to
conceptualize the cultural field in which they
operate as a ‘fluid, often contested, and only
partially integrated mosaic of narratives,
images, and signifying practices’ (Comaroff
& Comaroff, 1991: 29). In this field, actors
will frequently aim to stake a claim for
new and differing governance against
contenders, resulting in continuing contest
and struggle. Such a view of governance has
been advanced by some authors in the
accounting literature. For example, Covaleski,
Dirsmith, and Michelman (1993) argue that
control-systems such as case-mix accounting
present unfinished processes infused with
power and are open to manipulation by vari-
ous organizational actors, thus echoing the
idea expressed by Thompson (1990) that the
symbolic order is fragile and can never be
taken for granted; its maintenance is as
problematic as its change, making the ‘ideo-
logical work of repair and renovation’ a never-
ending project (Scott, 1985: 23).
 INSTITUTIONS AND CORPORATE GOVERNANCE
The view I have advanced here does not
imply that governance regimes cannot take on
a relatively stable nature. Clearly, the symbolic
orders that underlie corporate governance
regimes can become reinforced by formalized
arrangements such as legal regulations and
political sanctions. But while such legal under-
pinnings can have a stabilizing effect, what
emerges eventually is a continuum of gover-
nance regimes, ranging from settled periods of
relative stability to unsettled periods of chal-
lenge and change, with cultural narratives
about power and authority either sustaining
existing orders or providing the tools for con-
structing new ones (Swidler, 1986).
So far, I have argued for an institutional
approach to corporate governance that takes
into account the normative nature of culturally
constructed governance models and highlights
the role of conflict and resistance in corporate
governance. Yet, such governance models are
not merely higher-order systems of meaning.
Rather, much of the action of institutions lies
in their everyday enactment and the ways in
which abstract meaning systems become tan-
gible in everyday experience. As suggested by
Scott (1985) and Fine & Sandstrom (1993), to
understand the working of institutions it is
essential to tie them closely to action and
everyday practice, and specific governance
practices in particular.
A focus on practices is attractive to the study
of corporate governance because the normative
claims that inform governance models are not
always readily transformed into corresponding
practices. The overt exercise of power reflect-
ing self-interest is frequently avoided for fear
it would mobilize opposition. As a result, pow-
erful actors often move to replace overt power
with more formalized and structural control
practice (Covaleski et al., 1993). Accordingly,
the appropriate focus may frequently be not
only overt espousal and diffusion of gover-
nance ideologies, but also the practices
through which such ideologies are enacted.
Particularly formalized, highly institutional-
ized practices such as financial incentive plans
or monitoring arrangement present effective
tools for influencing social situations and are
393
‘an adroit substitute for the overt use of power,
the very deployment of which might actually
signal weakness’(Covaleski et al., 1993: 76;
also Pfeffer, 1981). At the same time, agents
that are the target of such monitoring and con-
trol attempts frequently try to influence the
implementation of practices such as incentive
plans or financial reporting. This highlights
issues of spread, implementation, and manipu-
lation of governance practices, i.e. changing
either the reach or meaning of the practice
within and for the organization (Davis, 2005).
In other words, practice diffusion and imple-
mentation frequently present the grounds on
which battles between various interest groups
are fought, and thus deserve special attention.
THE DIFFUSION OF GOVERNANCE
PRACTICES
The diffusion of corporate governance prac-
tices presents perhaps the most developed
field of applying institutional theory to cor-
porate governance. Much of this research has
focused on the antecedents of successful dif-
fusion, focusing specifically on the compati-
bility of the diffusing practice and the
adopting organization. An institutional view
of governance practices as implicit theories
raises the question of fit between practice
and those theories held by adopters, as prac-
tices do not diffuse into an institutional
vacuum, but rather into a pre-existing moral
universe or ‘cultural field’ (Comaroff and
Comaroff, 1991). One of the first works to
take this approach was Hirsch’s (1986) study
of the rhetoric of corporate takeovers, which
argued that an early misfit between the
understandings surrounding takeovers and
the dominant views held by the business
community inhibited the spread of this
practice. However, a normative framing of
the practice in line with the values of
American business culture eventually facili-
tated the diffusion and legitimation of
takeovers. Similarly, Davis and Greve (1997)
found that the spread of poison pills and
394 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
golden parachutes – two anti-takeover
defenses that became popular during the
wave of hostile takeovers of the 1980s – fol-
lowed differing pathways that depended on
the normative claims embedded in these
practices. Poison pills diffused quickly and
widely through shared directorships as their
legitimacy was based on the defense of the
corporation against outside raiders; a claim
that could be readily rationalized by outside
directors. In contrast, the diffusion of golden
parachutes proceeded much more slowly
through regional elite networks, which is
commensurate with a practice that was sur-
rounded by greater controversy as it
appeared to clearly privilege executives over
other constituents. Examining the spread of a
shareholder value orientation among German
firms, Fiss and Zajac (2004) and Sanders and
Tuschke (2007) find evidence that gover-
nance practices compatible with the mental
models and educational background of top
executives are also more likely to be imple-
mented. Similarly, Palmer and Barber (2001)
show the importance of elite education for
determining diversifying acquisition activity,
while Espeland and Hirsch (1990) point to
the important role that accounting played in
providing the conceptual underpinnings that
facilitated and legitimated the U.S. conglom-
erate mergers of the 1960s. By offering a
framework for making sense of the firm as a
portfolio of income streams, the rhetoric
of accounting accelerated the spread of a
variety of practices, culminating in the emer-
gence of the hostile takeover and the market
for corporate control. These studies highlight
the role of theorization in the diffusion
process (Strang and Meyer, 1993), where
diffusing practices are framed such as to
make them more compatible with existing
cognitive and social requirements, an insight
that has also been applied to the diffusion
and institutionalization of corporate gover-
nance codes in the international arena
(Enrione, Mazza, and Zerboni, 2006).
Other authors have pointed to the role of
mimetic isomorphism in influencing choices
of governance mechanisms. For example,
Ahmadjian and Robinson (2001), in studying
the spread of downsizing among Japanese
firms, point to the importance of a ‘safety-in-
numbers’ effect, where growing prominence
of a practice facilitated its spread as individual
firms were less likely to be noticed or criti-
cized. Similarly, Venkatraman, Loh, and Koh
(1994) examine the spread of joint ventures
and the multidivisional form, finding that iso-
morphic pressures to adopt were more preva-
lent for joint ventures since this practice did
not require a drastic rearrangement of the
organizational structure. Palmer, Jennings,
and Zhou (1993) also point to the importance
of mimetic pressures in the spread of the mul-
tidivisional form, where prevalence of this
governance arrangement increased the likeli-
hood of its adoption by other corporations.
Suggesting a somewhat modified version
of mimetic pressures, Davis’ (1991) study
emphasizes the importance of ties to prior
adopters in the spread of poison pills as an
anti-takeover defense among the largest U.S.
corporations during the 1980s, with mimicry
operating mainly through direct ties rather
than the observation of competitors.
Other studies have argued that more atten-
tion needs to be paid to the coercive power of
other organizations and legislative bodies in
promoting diffusion (e.g. Barron, Dobbin, and
Jennings, 1986; Scott, 1987). In an important
contribution, Davis and Thompson (1994) sug-
gest that efficiency-oriented governance
approaches based on agency theory are fre-
quently inadequate for explaining the politics
of corporate control, and particularly the emer-
gence of shareholder activism. Drawing on the
literature on resource mobilization, Davis and
Thompson develop a social movements per-
spective that highlights the importance of gov-
ernance actors’ interests, social infrastructure,
and mobilization in determining the likelihood
for successful collective action within a given
political opportunity structure. Similarly draw-
ing on a social movements perspective, Rao
and Sivakumar (1999) argue that powerful
investor rights activists compelled organiza-
tions to adopt boundary-spanning structures
that signaled the primacy of shareholder rights.
 INSTITUTIONS AND CORPORATE GOVERNANCE
The insights of these studies support a ‘forced-
selection’ perspective (Abrahamson, 1991)
where powerful organizations impose adoption
of practices – be they technically efficient or
not – over the resistance of other actors. These
insights are also reflected in Oliver’s (1991)
argument that features of the organization’s
context, such as the multiplicity of its stake-
holders and the organization’s dependence on
them, are likely to predict adoption or non-
adoption of practices. For example, Palmer,
Friedland, Jennings, and Powers (1987) and
Palmer, Jennings, and Zhou (1993) point to the
importance of powerful owners in determining
organizational structures, while Palmer et al.
(1995) show that the spread of predatory
takeovers was consistent with an embedded-
ness approach that highlights the role of a
firm’s position in networks as well as the posi-
tions of its managers and directors in the firm’s
ownership structure and the social network of
the business elite. In a similar vein, Fiss and
Zajac (2004) argue that the spread of a share-
holder value orientation among German firms
importantly reflected the power and interests
of various ownership groups, thus also high-
lighting the role of coercive influence in the
diffusion of governance practices. The insights
of these studies thus point to a model of the
diffusion process that sees the probability and
speed of a diffusing practice as a function of
the number, interest, and relative power of
agents within a given environment (Marquette,
1981; Fligstein, 1985), thus including both
organizations and outside stakeholders into the
diffusion model where both the actors involved
and their interests tend to be institutionally
constructed (Aguilera and Jackson, 2003)
VARIATION IN GOVERNANCE
PRACTICES
While institutional theory has contributed
considerably to our understanding of how and
why governance practices diffuse, less atten-
tion has been paid to the diffusing
practices themselves. Much of the prior
395
research tends to treat diffusing practices
as homogeneous entities that do not vary
by context and remain stable over time.
However, such homogenizing assumptions
seem questionable. If diffusing practices come
with explicit and implicit theories attached,
then adoption should go along with a consid-
erable amount of interpretive work that aims
to integrate these theories into pre-existing
organizational frameworks and world views.
As Strang and Soule argue, such interpretive
work ‘selects and transforms the diffusing
practice,’ and while some practices may be
more appropriate for interpretive work than
others, ‘none come out of this process unmod-
ified’ (Strang and Soule, 1998: 277).
Such considerations point our attention to
the study of variation in practices, an issue that
has emerged as a central concern of institu-
tional theory (e.g. Lounsbury, 2007; Lawrence
and Suddaby, 2005). A number of studies have
begun to examine how practices are modified,
translated, and reinvented to fit local needs
(e.g. Boxenbaum and Battilana, 2005;
Czarniawska and Joerges, 1996; Djelic, 1998;
Fiss and Zajac, 2006; Lounsbury, 2001; Morris
and Lancaster, 2005; Sahlin-Andersson and
Engwall, 2002). A common theme emerging
from these studies is that while there are fre-
quently unifying elements that inform diffus-
ing practices, their actual enactment tends to
take a variety of forms. An important reason
for such variation lies in the fact that the inter-
nal dynamics of organizations may frequently
result in differential responses to external insti-
tutional pressures (Greenwood and Hinings,
1996). For example, Zbaracki (1998) suggests
that implementation of Total Quality
Management (TQM) practices resulted in con-
siderable variation as managers appropriated
the rhetoric of quality management, with TQM
becoming increasingly ambiguous and open to
appropriation. Likewise, Lounsbury’s (2001)
study of staffing practices in college recycling
programs indicates that practice variation dif-
fered depending on both connections to exter-
nal social movement organizations and internal
features such as size, ownership nature,
and social comparison processes relating to
396 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
similar organizations. What emerges is imple-
mentation as not only a technical but also a
political and cultural process where new prac-
tices become appropriated into ongoing
exchanges and conflicts. Such a view, where
practices are adapted to fit local needs, has also
been suggested by more macro-level studies of
the international diffusion of the arm’s length
contracting standard (Eden, Dacin, and Wan,
2001) and corporate governance codes
(Aguilera and Cuervo-Cazurra, 2004). As
these studies indicate, a focus on variation is
central for a fine-grained understanding of cor-
porate governance practices and moves
beyond the acceptance of surface conformity
to explore the various forms of meaning and
transformation associated with specific
practices (e.g. Lounsbury, 2001; Zilber, 2006).
GOVERNANCE AND RESISTANCE
The issue of resistance to governance models
and practices has formed an important yet
somewhat unrecognized undercurrent in the
literature on corporate governance. The con-
cept of corporate governance itself implies the
existence of both governable entities and even
more importantly governable persons (Miller
and O’Leary, 1987). An important part of cor-
porate governance thus relates to the construc-
tion of managers and employees as not only
corporate constituents with rights and respon-
sibilities but also entities to be managed with
efficiency. The roots of this development can
be traced back to Taylor’s Principles of
Scientific Management (1913), which cen-
tered around the efficiency of the individual
worker and insisted that ‘each worker be
singled out, to be rewarded or punished on the
basis of his or her individual performance’
(Miller and O’Leary, 1987: 253). This theme
finds its counterpart in contemporary agency
theory, which likewise constructs the manager
as primarily self-interested, with goals that
conflict with those of the principal and greater
risk averseness (Jensen and Meckling, 1976;
Eisenhardt, 1989). Accordingly, after con-
structing the manager as an agent to be
controlled and monitored, most of agency
theory concerns itself with refining the incen-
tive and monitoring mechanisms to achieve
optimum efficiency, focusing particularly on
individual performance outcomes. As was true
for Taylor’s scientific management, agency
theory thus likewise views the executive as
inefficient and in need of being ‘enmeshed
within a routinely-applicable calculative appa-
ratus’ (Miller and O’Leary, 1987: 253). The
implications of this process of constructing
the nature of the governable person are con-
siderable, as indicated by arguments about the
negative effect of agency theory on ethical
behavior (Ghoshal, 2005) as well as recent
work on the transformation of financial mar-
kets in accordance with theoretical models
about their nature (MacKenzie, 2006;
MacKenzie and Millo, 2003).
While the institutional view of governance
advanced here differs considerably from that
advanced by agency theory, these agentic
models nevertheless highlight the fact that gov-
ernance has to be accomplished since it will
frequently be resisted by those whose compli-
ance is to be achieved. In line with
Granovetter’s (1985) caution against overso-
cialized models of actors, these considerations
point our attention again to the ways in which
institutional processes are frequently far from
complete, leaving room for contestation and
manipulation, the necessary counterparts to
the exercise of power (Clegg, 1989). The
knowledgeable and experienced practitioners
that inhabit many organizations will frequently
attempt to resist the introduction of formal
control practices by manipulating the applica-
tion of such new practices, transforming them
into means for advancing their respective inter-
ests (Dirsmith, Heian, and Covaleski, 1997).
Acknowledging the impossibility of perfect
control, one stream of literature has focused on
the role of decoupling as a response to institu-
tional pressures. In its classic formulation, the
concept of decoupling referred to a situation
where ‘structure is disconnected from technical
(work) activity, and activity is disconnected
from its effects’ (Meyer and Rowan, 1978: 79).
At the same time, it is this very decoupling that
 INSTITUTIONS AND CORPORATE GOVERNANCE
maintains the legitimacy of the organization.
Meyer and Rowan suggest that close supervi-
sion may frequently be counterproductive,
since it would reveal a lack of trust in the
supervised organizations and would expose the
controlling agencies to uncertainties arising at
the technical core of these organizations,
uncertainties that neither the organizations nor
their supervising agencies have the capacity to
control. In order to prevent these uncertainties
from leaking into the larger governance system
and making it ungovernable, controlling agen-
cies thus frequently rely on formal structure as
an indicator of legitimacy; surface compliance
may suffice where deep control is impractical,
or indeed impossible.
Expanding the classic notion of decoupling,
a number of recent studies have connected it to
work on impression management in develop-
ing a symbolic management perspective that
emphasizes how organizations, by purposive
action, may maintain or increase their legiti-
macy. In contrast to the work of Meyer and
Rowan, legitimacy here is not achieved
through a logic of confidence and cooperation,
but rather by calculating, manipulative, or
even deceptive actions that aim to show com-
pliance towards external observers while con-
cealing nonconformity (Elsbach and Sutton,
1992; Oliver, 1991). Such a perspective has
been successfully applied to study a lack of
implementation relating to corporate gover-
nance practices. For example, Westphal and
Zajac (1994) find that symbolic adoption of
long term incentive plans for management is
frequently decoupled from actual implementa-
tion of such plans. This is particularly true in
firms where powerful CEOs have the resources
to resist board efforts to change their incentive
structure. Likewise, Carpenter and Feroz
(1992; 2001) examine the adoption of gener-
ally accepted accounting principles among
U.S. state governments and find that imple-
mentation of such accounting standards was
primarily driven by the desire to exhibit insti-
tutionalized practices to the public and credit
markets. At the same time, the authors point to
resistance to institutional pressures, such as the
state of Delaware’s shallow implementation of
397
GAAP based financial statements and the
mobilization of cost-benefit rhetoric to defend
non-implementation. Similarly, Fiss and Zajac
(2006) show that a lack of implementation is
frequently accompanied by rhetoric aimed at
assuring constituents of compliance with
external demands.
However, resistance to institutional
demands need not only take the form of
incomplete implementation, surface compli-
ance, and impression management. Rather
than taking the governance environment as
exogenous, corporations can frequently act
to actively influence this environment to
make it more suitable to their needs. As sug-
gested by Carruthers, ‘organizations are not
only granted legitimacy; sometimes they go
out and get it’ (1995: 324). An example of
this active construction of the institutional
environment is given by Mezias (1990), who
shows how large corporations in the U.S.
acted to influence their financial reporting
requirements. Similarly, Bealing, Dirsmith,
and Fogarty (1996) point to second-order
effects of institutionalization in governance
affairs, where, particularly in a fragmented
socio-political environment, organizations do
not simply adopt institutionalized structures.
Instead these organizations actively partici-
pate in building up a framework for social
control relevant to their own constituents
(such as the accounting profession for the
US Securities and Exchange Commission),
thereby establishing the legitimacy of the
interrelationship of the organization with its
constituents. A symbolic perspective on cor-
porate governance thus points our attention to
the various ways in which corporations aim to
elude institutional demands by hiding non-
compliance or aiming to affect the very defini-
tion of what constitutes acceptable conduct.
OWNERS, MANAGERS, EMPLOYEES,
AND OTHERS
The world of corporate governance is inhab-
ited by a variety of groups with varying
398 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
identities and interests; yet much of the
literature has focused on two of these groups,
namely managers and owners, and has
furthermore tended to focus on them in the
context of the publicly traded corporation.
The literature in finance tends to assume
that owners are fairly homogeneous in their
interests, focusing primarily on the maximiza-
tion of shareholder value (e.g. Bagwell,
1991; for an overview of the literature on
ownership, see Kang and Sørensen, 1999).
A more institutionally oriented approach
points to the idea that both actors and
their interests are not merely given but
instead constructed through their embedded-
ness in larger social systems (Aguilera
and Jackson, 2003). In such a view, owners
are characterized by various interests and
identities that translate into differences
in governance orientations and models
(Fligstein, 1990; Fiss and Zajac, 2004).
Accordingly, owners tend to be much less
homogeneous in their interests than com-
monly assumed within the contractual view of
the firm. Furthermore, owners may differ in
their attitudes towards shareholder value max-
imization, not only across different ownership
groups such as banks, family owners, and
other corporations, but their interests may
differ even within such groups (e.g. Fiss and
Zajac, 2004). Similarly, Aguilera and Jackson
(2003) have advanced an actor-centered insti-
tutional approach to corporate governance that
emphasizes how the interests of the main cor-
porate governance actors are both constructed
and represented.
In addition, research drawing on institu-
tional arguments has shown the role of owners
in the spread of governance models. In this
regard, Ahmadjian and Robbins (2005) point
to the importance of ownership in studying the
spread of practices associated with U.S. share-
holder value capitalism to Japan. Their find-
ings indicate that foreign investors were
associated with an increased restructuring of
Japanese firms that were less central in the
Japanese political economy. Similarly, Fiss
and Zajac (2004) study the spread of a share-
holder value orientation among German firms
in the 1990s and show that the diffusion of this
normative model happened along ownership
lines where power to adopt a different gover-
nance model could be exercised. Several other
authors have employed a social movements
perspective to examine the origins and effects
of shareholder activism (Davis and
Thompson, 1994; Proffitt and Spicer, 2006).
While these studies present important devel-
opments in building an institutional theory of
ownership, much remains to be done to further
our understanding here.
Another important line of inquiry has
focused on understanding who the top
managers are, particularly how they are
selected, what their educational and functional
background is, and what social circles they
inhabit. Such considerations are relevant as the
background and social embeddedness of top
executives is likely to be reflected in the views
they hold regarding the nature of the corpora-
tion and in whose interest it should be gov-
erned (Hirsch, 1986; Espeland and Hirsch,
1990; Fligstein, 1990, 2001). A considerable
amount of work has focused on the formation
and influence of the business elite in the
United States (e.g. Useem 1979, 1980;
Domhoff, 1967). This literature has examined
both differences and commonalities in values,
interests, and identities between managers and
shareholders, with particular interest in
whether there exists a ruling class with
common perceived interests. For example,
Useem and Karabel’s (1986) study of the rela-
tionship between educational and social back-
grounds and careers of U.S. managers found
that career mobility was enhanced by presti-
gious educational degrees, pointing to the
importance of social capital for reaching the
upper strata of management. Likewise, mem-
bership in the exclusive social clubs of the
elite forms an important source of social
cohesion (Useem, 1980) and affects the spread
of practices among corporations (e.g. Palmer
et al., 1995).
Finally, an extensive stream of research
has examined the importance of executives in
their role of establishing connections bet-
ween firms through interlocking directorates.
 INSTITUTIONS AND CORPORATE GOVERNANCE
This literature has examined the effect of board
interlocks regarding a variety of issues ranging
from the exercise of corporate control (e.g.
Mariolis, 1975; Mintz and Schwartz, 1981) to
corporate political action (Mizruchi, 1989,
1992) to social cohesion (e.g. Useem, 1984;
for an overview of these literatures, see e.g.
Mizruchi, 1996).
Other researchers have employed institu-
tional theory to examine the selection of top
executives. Fligstein (1987, 1990) shows how
a financial conception of control emerging in
the postwar United States and the large-scale
merger movement of the 1960s resulted in
increasing numbers of CEOs with a back-
ground in finance, and firms with such CEOs
were in turn more likely to be the targets of
takeover attempts (Fligstein & Markowitz,
1993; Davis & Stout, 1992). Finance CEOs
were also more likely to adopt the new share-
holder value conception of control emerging in
the 1980s (Fligstein, 2001; Fiss and Zajac,
2004). Ocasio (1999) has shown the role of
both cognitive and political factors in the
formal and informal rules governing CEO suc-
cession, particularly the choice of insider
versus outsider successors. Similarly,
Thornton and Ocasio (1999) and Thornton
(2004) demonstrate how the institutional
logics guiding executive succession in the
higher education publishing industry shifted
from an editorial to a market logic. Regarding
board composition, Luoma and Goodstein
(1999) have pointed to the importance of insti-
tutional influences on the selection of corpo-
rate directors. These studies indicate that the
selection of top management is importantly
shaped by institutional forces emerging out of
organizational and societal processes.
While owners and managers have received
greater attention, major constituent group –
employees – has been less often examined
from an institutional perspective. In this
regard, an institutional approach is not differ-
ent from the corporate governance literature
more generally (cf. Blair and Roe, 1999) and
the Anglo-Saxon corporate governance litera-
ture in particular. Within the literatures on
labor representation, mechanisms such as
399
works councils as well as union influence, a
number of authors have drawn on institutional
arguments (e.g. Aguilera and Jackson, 2003;
Gospel and Pendelton, 2004; Streeck and
Thelen, 2003). In addition, some authors
have employed institutional theory to examine
how control of employees is exercised.
For example, Barker (1993) shows how
value-based normative rules embedded in self-
managing teams make for more effective
control of workers than more traditional,
bureaucratic authority structures, while Oakes,
Townley and Cooper (1998) examine the ped-
agogical role of business plans as language that
redirects work and changes the identity of
managers and employees. However, given the
current dominance of the shareholder-centered
system, the role of employees is likely to
remain peripheral at least in the Anglo-Saxon
governance context, even though themes of
hegemony versus resistance to the shareholder-
centered governance model the part of
employees would warrant more attention.
Finally, some research in the institutional
theory tradition has expanded the focus to
consider the role of outside constituencies
in corporate governance. Several studies in
this regard have focused on the role of finan-
cial analysts, who occupy a central role as
boundary-spanning and evaluating audiences
for corporations. For example, Fogarty and
Rogers (2005) examine the creation of
analyst reports and find that this process
largely follows the logic of confidence
described by Meyer and Rowan (1977),
where strong expectations but little control
characterize the production of reports, a
process that is furthermore strongly depend-
ent on information controlled by managers.
Furthermore, Zuckerman examined the role
of analysts as product critics and has shown
that a mismatch between the cognitive cate-
gories used by securities analysts to affect
stock prices and de-diversification activity
(Zuckerman, 1999, 2000). These considera-
tions also point to the role of other actors
affecting the governance of corporations,
such as suppliers, debtors, professional
associations, the courts, and of course
400 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
government regulators (Fligstein and
Choo, 2005). Some of these have been
examined using a comparative perspective
on corporate governance, to which I now
turn.
THE COMPARATIVE STUDY OF
GOVERNANCE SYSTEMS
The institutional approach to corporate gov-
ernance suggests that national corporate
governance systems are importantly affected
by cultural differences (Tricker, 1984, 1990).
This points to the need to comparatively
evaluate the diversity of governance arrange-
ments. Such research on comparative
corporate governance has for a long time
been primarily the domain of taxonomists,
leading to a large body of mostly descriptive
research on differences in national corporate
governance systems (see e.g. Boyd, Carroll,
and Howard, 1996; Bradley et al., 1999;
Guillén, 2000 for reviews; see Roe 2003
for a political perspective). The main
assumption of this field of research has been
that each country’s system of corporate
governance developed in response to its par-
ticular historical, cultural, and technological
influences. However, recently a number of
scholars have aimed to develop these
arguments into more coherent frameworks
that allow for a better understanding of the
mechanisms that underlie national gover-
nance systems, as well as a systematic com-
parison of national differences in governance
arrangements. Two frameworks that have
particularly garnered attention in recent years
are the Varieties of Capitalism (VoC)
approach (e.g. Hall and Soskice, 2001;
Thelen, 2004), and the business systems per-
spective (e.g. Whitley, 1999; Morgan,
Whitley, and Moen, 2005). Their arguments
are relevant to the embeddedness approach
suggested by institutional theory and deserve
special attention here.
Building on a configurational approach, a
central theme in the VoC approach is the
notion that the economic systems of
advanced nations are marked by a variable
degree of cohesion and complemen-
tarity among their respective subsystems.
Beginning with a focus on the diversity of
modern economies, these authors argue that
variation emerges because corporations and
other social actors ‘develop distinctive strate-
gies and structures to capitalize on the insti-
tutions available for market or non-market
coordination in the economy’ (Hall and
Soskice, 2001: 48). For example, compara-
tive research on Japanese business models
has suggested that the keiretsu structure
of corporate governance presents a
competitive advantage for large Japanese
firms, since this structure leads to higher
rates of innovation, resulting in a competitive
advantage (Gerlach, 1992). While these
arguments are similar to those advanced
by a competitive logic of differentiation,
they differ in their emphasis of a systemic
perspective that points to institutional com-
plementarities. Building on the work of
Aoki (1994), the VoC approach thus views
national governance systems as part of a
system of interconnected institutions that
reinforce each other, creating stability but
also resistance to change. In this respect,
the VoC approach identifies two ideal types
of economies: liberal market economies
(such as the United States, Canada, the UK,
and Australia) that primarily rely on
markets to coordinate their financial and
industrial relations systems, and coordinated
market economies (such as Germany, Japan,
the Netherlands, or the Scandinavian
countries) that employ a variety of non-
market institutions to coordinate these
spheres (Hall and Soskice, 2001). Empirical
support for these arguments comes from a
variety of case studies on European
economies as well as comparative works
(e.g. Thelen 2001, 2004; Wood, 2001).
Several recent works have applied the VoC
framework to the study of corporate gover-
nance systems (e.g. Casper, 2001; Vitols
2001; Vitols, Casper, Soskice, and Woolcock,
1997; Ziegler, 2000), suggesting that this
 INSTITUTIONS AND CORPORATE GOVERNANCE
approach can offer a framework for under-
standing the connections between corporate
governance systems and the larger political
economy.
A related approach to the study of
economies and governance is advanced by
Whitley (1992a, 1992b, 1999) and others,
who aim to explain the institutional structur-
ing of business systems. By business sys-
tems, these authors generally refer to the
‘distinctive patterns of economic organiza-
tion that vary in their degree and mode of
authoritative coordination of economic activ-
ities, and in the organization of, and inter-
connections between, owners, managers,
experts, and other employees’(Whitley,
1999: 33). Accordingly, the nature of the
relationships between these actors is of cen-
tral importance when contrasting business
systems. For example, business systems may
be characterized by inter-firm relations based
on arms-length contracting or repeated,
cooperative connections (e.g. Dore, 1986).
Likewise, the providers of capital may
view their investments as resources to be
supervised directly or they may delegate
this task to trusted agents (e.g. Whitley,
1999). From the combination of these forms
of relationships emerges a variety of possible
types of economic organization and gover-
nance. However, interactions between vari-
ous forms of relationships limit the
feasibility of business systems, and Whitley
(1999) identifies six that range from the frag-
mented via the state-organized to the highly
coordinated.
Work building on a business systems per-
spective offers an intriguing framework for
those who aim to study corporate governance
through an institutional lens, particularly
because its theoretical apparatus is not lim-
ited to the study of advanced economies.
The business systems approach provides a
systematic foundation for examining corpo-
rate governance practices, particularly when
merged with insights from other theoretical
traditions (Tempel and Walgenbach, 2007).
For example, Lane (2005) draws on a busi-
ness systems approach informed by the
401
notion of an institutional logic to examine
changes in the German model of corporate
governance. Similarly combining a business
systems approach with other institutional
arguments, Djelic and Quack (2003) and
Djelic and Sahlin-Andersson (2006) show
how national institutional systems are
increasingly nested within transnational,
higher-order institutional frames. Such
insights are highly relevant for the study of
corporate governance, and particularly
regarding the potential for convergence
in governance systems (Tempel and
Walgenbach, 2007). Both the VoC perspec-
tive and the business systems approach
tend to be focused around ideas of comple-
mentarity and consistency. However, rather
than exploring how such systems provide
coherence to corporate governance, an
institutional approach also emphasizes the
importance of conflict and inconsistency.
Such considerations shift the focus to
the importation of practices from one
institutional context into another, highlight-
ing issues of enactment and integration, and
thus questioning the coherence view of
national systems of corporate governance.
Consistent with a focus on practices, it would
also be useful to shift the level of analysis
further down to the firm level to examine
diversity even within ‘national’ systems.
Such systems are frequently less than coher-
ent but instead are marked by considerable
tensions between different governance
models and institutional logics, a process that
will likely lead to considerable change
(O’Sullivan, 2000). However, this change
does not necessarily mean greater conver-
gence in governance system, but rather
increasing variety.
EMERGING DIRECTIONS FOR
FUTURE RESEARCH
As a field for applying institutional theory,
corporate governance is likely to continue
expanding, and the institutional approach is
402 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
well poised to provide a coherent framework
for the study of governance systems
and practices across various levels of analy-
sis. As I have argued here, a culturally and
politically informed institutional approach
offers a counter weight to the currently dom-
inating contractarian framework for under-
standing governance arrangements. This is
not to say that both approaches cannot
inform each other – in fact, some of the most
intriguing insights into governance arrange-
ments are likely to come from approaches
drawing on several theories and disciplines
(Fiss, 2006). In the remaining, I want to
sketch out some of the more promising
avenues for further research, applying an
institutional approach to the corporate
governance arena.
In line with my above arguments regarding
the role of power and the normative nature of
governance models, we need to expand our
understanding of how governance models as
shared cognitive understandings are propa-
gated, find support, and become rooted
across differing institutional contexts. This
research project would need to pay attention
both to the ways in which governance models
spread across national and international
arenas and to the processes by which indige-
nous governance models become uprooted
and contested. Prior research in the contrac-
tarian literature has pointed towards conver-
gence in international governance systems
due to the effects of globalization and the
power of financial markets (e.g. Coffee,
1999; Bradley et al., 1999; Hansmann and
Kraakman, 2001). In contrast, emerging
institutional work has questioned the likeli-
hood of convergence, pointing instead to
persistence in national systems alongside
convergence processes (e.g. Aguilera and
Jackson, 2003; Fiss and Zajac, 2004;
Guillén, 2001; Jackson and Moerke, 2005).
As argued by Tempel and Walgenbach
(2006), further research should look to move
beyond the convergence–divergence debate
and should begin to disaggregate the
processes occurring at various levels of aggre-
gation, such as company, sector/industry, and
national level of corporate governance
(Hollingsworth, Schmitter, and Streeck,
1994; Casper, 2000).
Future research should also draw further
attention to the ways in which governance
models hide power relations as they become
increasingly taken for granted and take on the
mantle of neutrality and inevitability. An
important role in this regard lies with events
that lift this mantle and provide a glance into
the political nature of resource distributions,
such as the current wave of corporate scandals
that has swept the United States. Governance
scandals in particular provide opportunities
when the seams come apart, allowing for
regimes to be criticized and changed. As such,
the study of such scandals, the ways in
which they are managed by corporations and
regulators, as well as how they are framed and
used for mobilization by various interest
groups, such as activist investors, are of partic-
ular interest to institutional theory and provide
fertile ground for future research. Such an
approach might eventually offer a more sys-
tematic framework of the conditions that lead
to relatively strongly institutionalized versus
less strongly institutionalized models of cor-
porate governance.
The study of emerging and transition
economies presents another promising
area for understanding both change and per-
sistence of corporate governance systems
and practices (e.g. Allen, 2005; Millar,
Eldomiaty, Choi, and Hilton, 2005). How are
corporate governance models and practices
propagated in such environments and do they
take hold or do they remain externally
imposed orders that meet with resistance
from established interest groups? What is the
role of symbolic and surface compliance in
this regard? Who are the actors that lead
reform efforts and what strategies do they
pursue? These are but some of the questions
that require answers once we expand the
focus of inquiry beyond the currently domi-
nating Anglo-Saxon governance environ-
ment, in combination with Germany, Japan,
and France, as the economies that have
received the most attention from researchers.
 INSTITUTIONS AND CORPORATE GOVERNANCE
Understanding the variety of governance
arrangements and the role of employees,
banks, family owners, company networks
and the state in Asian, South American, or
Eastern European countries requires a holis-
tic approach to corporate governance, and the
institutional perspective is well positioned to
contribute such an approach
Regarding the emerging themes of transla-
tion and adaptation in institutional theory,
we still know rather little about the process
by which the re-organization of a model is
accomplished, pointing to the need for a
deeper understanding of how governance
practices combine and recombine. For
example, in what ways are governance sys-
tems holistic and interconnected or modular in
nature, and which features of these systems
may be safely removed or added without
disturbing overall operation of the governance
system? Do hybridization and loose coupling
present viable trajectories (e.g. Deeg, 2005;
Lane, 2005)? To analyze such issues, it may
be useful to examine other fields that have
studied processes of syncretism and recombi-
nation, such as anthropology (e.g. Stewart,
1999). By drawing on insights developed
there, we may be able to gain a much deeper
understanding of the cultural embeddedness
of corporate governance practices.
Finally, while researchers working within
the institutional tradition have made some
forays into the role of constituents and their
identities, these still present fruitful fields for
further inquiry. For the most part, institu-
tional theory has not focused directly on the
role of ownership and control (cf. Fligstein
and Freeland, 1995). In this regard, family
owners present a particularly interesting
case, as such owners are a group where con-
flicts over economic versus social logics of
investment are particularly likely to be
prevalent. Likewise, while some research
has focused on the relationship between
ownership and national institutional context,
there is still a need for more cross-national
studies of strategy and corporate governance,
and particularly studies that would go
beyond national differences to examine the
403
underlying dimensions along which institu-
tional contexts vary. Furthermore, there is an
opportunity for institutional theory to bring
all the corporate constituents back into the
focus of governance research. Rather than
focusing merely on executives and directors,
such work could take seriously how gover-
nance is constructed at the intersection of
various influence spheres, including those of
inside and outside constituents and the
attempts of corporate actors to actively
manage such constituent groups. Such an
emphasis on the active construction and
propagation of governance accounts would
enable institutional approaches to bring both
relevant and critically-reflective insight to
the current and future corporate governance
debates.
ACKNOWLEDGMENT
The author acknowledges the helpful com-
ments of Norman Macintosh, Sigrid Quack,
Paul Adler, Christina Ahmadjian, Roy
Suddaby and the other editors of the
Handbook of Organizational Institutionalism,
and seminar participants at the University of
Southern California and the Center for
Advanced Study in the Behavioral Sciences.
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 SECTION IV

Interfaces

Beyond Constraint: How
Institutions Enable Identities
INTRODUCTION
In this chapter, I take a perspective on insti-
tutional theory that moves beyond constraint.
I look at how institutions enable organiza-
tional identity construction by supplying a
set of possible legitimate identity elements
with which to construct, give meaning to, and
legitimize identities and identity symbols.
Institutionalism offers a process model of
transformational mechanisms that explicates
how macro-level, interorganizational influ-
ences situate and shape organizational identi-
ties. It can account for the regularity or
patterning of identity markers (or symbols)
across organizations within an organizational
field. As well, it offers a dynamic frame-
work on organizational identity construction
which explains how organizations may
adapt their identities so as to align with sanc-
tioned norms and practices so as to secure
legitimacy. I explore how institutionalism
expands the current theorization of identity
by deepening our understanding of the
essence of identity, offering a reconcepu-
talization of organizational identity as a
form of institutional bricolage, and by ex-
planing how the logic of identity motivates
16
Mary Ann Glynn
and governs organizational performance.
Finally, implications for future research are
offered.
Identity is a construct that has long been
central to institutional theorizing. A half-cen-
tury ago, Selznick (1957) postulated that
institutionalization – the infusion of value in
organizations – ‘produces a distinct identity
for the organization’ (p. 40) and, moreover,
that ‘maintaining this distinctive identity is
integral to institutional survival’ (p. 63).
Institutional approaches that focus on the
cognitive-normative context of organizations
(DiMaggio & Powell, 1991; Zucker, 1983)
have emphasized the importance of social
identities (Scott, 1995: 44) as well as their
vitality. And yet, in spite of this acknowl-
edged relationship, the link between institu-
tional theorizing and organizational identity
remains relatively unexplored. The gap is
surprising, for the two theories have much in
common. Both institutionalism and identity
have meaning at their core; as well, both
theories offer accounts of the creation and
role of meaning in the constitution and
practices of organizations. How then can two
theories so similar in their focus be so
different in their trajectories?
414 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
In the current literature, there is little inte-
gration of the two perspectives; worse, they
are often depicted as almost antithetical. For
instance, institutional theory appears to priv-
ilege sameness and isomorphism, while orga-
nizational identity theory advantages
distinctiveness and polymorphism; and,
while institutional theory focuses on the
inter-organizational level of organizational
fields or industries, identity theory tends to
be grounded in the organizational level
(Pedersen & Dobbin, 2006).
And yet, in spite of these obvious differ-
ences, there are subtle points of connection
that offer opportune sites where institutional-
ism can broaden theories of organizational
identity. For instance, institutionalism offers
a process model of transformational mecha-
nisms that explicate how macro-level, inter-
organizational influences situate and shape
organizational identities. Moreover, through
transformational processes of isomorphic
conformity and mimesis, institutionalism
offers an account for the regularity or pat-
terning of identity markers (or symbols)
across organizations within an organizational
field. And, institutionalism offers a dynamic
framework on organizational identity
construction which explains how organiza-
tions may adapt their identities so as to align
with sanctioned norms and practices in order
to secure legitimacy.
Institutionalism can move the study of
identity beyond the organizational level of
analysis to locate identity in broader frames
of meaning that arise from industry, cultural
and societal institutions. And, although iso-
morphic pressures can constrain the choices
of elements that organizations use to con-
struct their identities, institutional forces also
enable the process of identity construction
itself. The institutional environment supplies
possible and legitimated meanings and sym-
bols that constitute the ‘raw materials’ which
organizations appropriate to construct their
identities. By grafting these institutional
elements onto their identities, organizations
attempt to garner legitimacy which enables
resource flows favorable to their enterprises.
In this chapter, I initiate an exploration of
the linkage between institutions and organi-
zational identity. Because the limiting effects
of institutional isomorphism are well recog-
nized, I seek to move beyond this model of
constraint to explore an alternative model of
how institutions enable organizational iden-
tity. Essentially, I propose that institutional-
ism enables organizational identity formation
by supplying a set of possible legitimate
identity elements with which to construct,
give meaning to, and legitimize firm identi-
ties and symbolization.
Even though institutional structures and
environments tend to sanction some kinds of
meanings and elements over others, they are
nonetheless complex and multi-textured in
meaning, thereby making some variation in
identities possible. Swidler (2001) illustrates
the wealth of meanings that are attached to, and
legitimated in, a single institution: marriage.
Weber and Glynn (2006) extend this reasoning
to the employment contract, arguing that sense-
making occurs with institutions, not in spite of
them. And Pedersen and Dobbin (1997: 432)
apply this argument to their discussion of insti-
tutions and organizational culture; similarly,
they see institutions as having a dual role in the
construction of organizational cultures, one that
is both constraining and enabling:
… modern collective actors seek formal isomor-
phism with other actors to classify themselves and
informal distinctiveness to enumerate themselves.
Enumeration … as integral to this process as was
classification … the naming of the bright planet
Venus to distinguish it from the star Polaris and of
Halley’s Comet to distinguish it from planets. …
the method called for naming or numbering par-
ticular isomorphic units to the end of identifying
and differentiating them for study … Enumeration
established the empirical cases from which gener-
alizations could be drawn. (434).
Pedersen and Dobbin (2006) offer an inte-
gration of the competing and contradictory
forces that are implicated by institutionalism
and identity construction. In their view, con-
formity occurs at the more macro-level of
social classification, resulting in broad simi-
larities and regularities in patterns of organiza-
tional identities that, in the aggregate,
 BEYOND CONSTRAINT: HOW INSTITUTIONS ENABLE IDENTITIES
constitute a classification system for identi-
ties. This is apparent, for instance, in organiza-
tional naming patterns over time (within
historical periods) and in dominant industry
naming practices; First Federal Bank is pre-
ferred to (and legitimated) rather than Tony’s
Bank (Glynn & Abzug, 2002; Glynn &
Marquis, 2005). And yet, institutions are not
perfectly replicated in organizational adoption
and practices; variations arise from the slip-
page that occurs as institutions adapt to local
conditions or are interpreted in particular con-
texts to reflect specific organizational mean-
ings. Within the banking category, for
instance, not only is First Federal Bank legiti-
mate, but also Bank of America, Citizens
Bank and Sun Trust Bank. Thus, variations
arise even from a more standardized set of
constitutive rules that define identities. Thus,
as Pedersen and Dobbin (2006) might predict,
there are broad boundaries that circumscribe
the appropriate elements of identities within
social categories (such as banking organiza-
tions), but enumeration processes within cate-
gories that serve to distinguish one bank from
another. Thus, organizations construct stylized
identities from distinctive institutions in their
business, social and cultural environments.
In this chapter, I explore how institutions
enable organizational identities. I start by
reviewing the relevant literature to discover
how organizational identity has been concep-
tualized and opportunities where institution-
alism might inform current theorization.
Next, I elaborate some specific ways in
which institutions enable identities; these
include a deepening of our understanding of
essential elements of identity, a reconceptu-
alization of organizational identity as a form
of institutional bricolage, and a consideration
of how institutional logics encourage identity
performance in organizations.
THEORIZATIONS OF
ORGANIZATIONAL IDENTITY
Although the construct of identity has had a
long intellectual history in several different
415
domains of scholarship, inquiry into organi-
zational identity was launched with vigor
when Albert and Whetten published their
influential Research in Organizational
Behavior article in 1985. Their theorization
of identity has been quite impactful, receiv-
ing nearly 500 citations as of this writing.
My search on widely used databases (e.g.,
ABI Inform; Google Scholar) did not yield
any articles on organizational identity in
major management or organizational
journals prior to this 1985 publication.
The first article of significance to manage-
ment researchers appeared five years later in
the Academy of Management Journal:
Dutton and Dukerich’s (1990) influential
(and award-winning) case study of the NY
Port Authority (also with about 500 citations,
as of this writing).
Research on organizational identity has
demonstrated its significance for a number of
key organizational symbols, processes, and
behaviors. Organizational symbols and
structures have been shown to reflect organi-
zational identity globally (e.g., Glynn &
Abzug, 2002) and stakeholder interests more
specifically (e.g., Pratt & Foreman, 2000;
Scott & Lane, 2000; Brickson, 2005), to
compartmentalize different or antithetical
aspects of identity, by functional or
professional differentiation (e.g., Glynn,
2000; Golden-Biddle & Rao, 1997; Pratt
& Rafaeli, 1997; Pratt, Rockmann &
Kaufmann, 2006) or hierarchy (Corley &
Gioia, 2004), to motivate the choice of
organizational aspiration and emulation
(e.g., LaBianca et al., 2001), and to be con-
structed as a storied account of organiza-
tional history and biography through
language and rhetoric (e.g, Czarniawska &
Wolff, 1998; Fiol, 2001, 2002). As well,
researchers have also focused on individuals’
identification with the organization, which is
at least partly construed by their perceptions
of the organizational identity, particularly in
terms of its distinctiveness and prestige
(e.g., Mael & Ashforth, 1992; Bhattacharya,
Rao & Glynn, 1995; Brickson, 2005;
Bartel, 2001).
416 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Through these twenty years of research,
the original definition of organizational iden-
tity articulated by Albert and Whetten (1985)
persists, reverberating through other studies
and models. Albert and Whetten described
organizational identity as consisting of three
claims: ‘the criterion of claimed central
character … the criterion of claimed distinc-
tiveness … [and] the criterion of claimed
temporal continuity’ (Albert & Whetten,
1985: 265). The dominant approach models
organizational identity as a claim-making
process that centers on three core attributes:
the central, distinctive and enduring charac-
ter of the organization (Glynn, 2000).
Researchers have focused as much on the
particular attributes themselves as the
processes that underlie them. Moreover,
while the attribute-based perspective has
commanded the focus of researchers, it does
not have consensual affirmation (e.g., Corley
et al., 2006). Although the model itself is
rarely contested, its three core attributes are,
particularly in terms of their degree of cen-
trality, distinctiveness and durability over
time (e.g., Gioia, Schultz & Corley, 2000).
And yet, reflecting on these two decades of
identity research, post-Albert and Whetten
(1985), Corley and colleagues (2006) find
some convergence around the nature of these
attributes. In addition, they note the persist-
ence and dominance of the Albert and
Whetten (1985) formulation of organiza-
tional identity in the literature.
To get a more nuanced understanding of
current models of organizational identity, and
to examine what, if any, linkages to institu-
tionalism are evident, I reviewed the relevant
management and organizational literature
from 1985 on. I searched for articles whose
primary focus was organizational identity
using several electronic data bases (e.g., ABI
inform, ProQuest, Google scholar, Business
Source Complete), as well as my own read-
ing of the literature. I began with work pub-
lished in 1985 and continued through 2006,
identifying relevant publications using key-
word searches on ‘organization identity’ and
its variants, e.g., organizational identity or
simply identity (checking to see that
the latter focused on the level of the
organization). This yielded a total of 32
articles, of which roughly one-quarter are
empirical.
As I read (and re-read) these articles, two
distinctive approaches to identity clearly
emerged. One of these follows directly from
the Albert and Whetten (1985) definition:
identity as ‘essentialist’ and attribute-based,
i.e., reflecting some underlying or ‘true’
organizational character. A second approach
tends to focus on how identity functions as a
strategic resource, being deployed to com-
petitive advantage and functioning as a guide
to firm decision-making and strategic choice.
I categorized the articles on organizational
identity using these two dominant
approaches: identity as attribute-based and
identity as strategic orientation. And, because
I was interested in linking organizational
identity to institutional theory, I added a third
category: an institutional approach to organi-
zational identity. I categorized articles as
having an institutional approach when they
invoked any institutional elements or expla-
nations (explicitly or implicitly) in account-
ing for organizational identity, such as
ideological fault lines that hybridize identity,
status groupings and emulation/mimesis, or
roles for the professions and elites in identity
dynamics (e.g., a family-oriented firm, a reli-
gious organization).
More generally, in categorizing work on
organizational identity as institutional in
approach, I looked for any indications of what
Cerulo (1997: 387) describes as a sociologi-
cal approach. This centers on the social con-
struction of identity such that: ‘every
collective becomes a social artifact – an entity
molded, refabricated, and mobilized in accord
with reigning cultural scripts and centers of
power.’ Cerulo (1997) and others (e.g.,
Czarniawski & Wolff, 1998) have categorized
this perspective as anti-essentialist, in that it
places less emphasis on the unique character
or attributes of organizations and more on
organizations’ constructions of their position
in the social order or institutional field.
 BEYOND CONSTRAINT: HOW INSTITUTIONS ENABLE IDENTITIES 417

The results of my literature review, with
lists of the relevant articles, publication dates
and their primary approaches, are presented
in Table 16.1. Of the 32 published articles I
located on organizational identity, three-
quarters (24 articles or 75 percent) use an
attribute-based perspective. One-third of the
identity articles (11 articles or 34 percent)
took a strategic perspective on identity; of
these, nearly two-thirds (7 articles or 64
percent) also used an essentialist approach.
Finally, there was some evidence of an insti-
tutional perspective on organizational iden-
tity, but it was clearly in the minority; only
seven articles (22 percent) explicitly adopted
an institutional perspective while another
five (16 percent) seemed to use institutional
ideas implicitly (indicated by # in the Table).
Thus, it seems that organizational identity
researchers have emphasized an attribute-
based construal of identity in terms of its
core ‘essence,’ i.e., the central, distinctive

Table 16.1 Organizational identity approaches in the management literature, 1985–2006

Publication Attribute-
Author(s) Date outlet a based Strategic Institutional
Albert & Whetten 1985 ROB X
Fiol 1991 JM X X
Dutton & Dukerich 1991 AMJ X X
Dutton, Dukerich & Harquail 1994 ASQ X
Reger 1994 AMJ X
Sarason 1995 AMJ X X
Gustafson & Reger 1995 AMJ X X
Elsbach & Kramer 1996 ASQ X #
Gioia & Thomas 1996 ASQ X X
Golden-Biddle & Rao 1997 OS X
Pratt & Rafaeli 1997 AMJ X
Czarniawska & Wolff 1998 IS X
Fox-Wolfgramm, Boal & Hunt 1998 ASQ X X
Albert, Ashforth & Dutton 2000 AMR X
Pratt & Foreman 2000 AMR X #
Rao, Davis & Ward 2000 ASQ X
Scott & Lane 2000 AMR X
Gioia, Schultz & Corley 2000 AMR X
Glynn 2000 OS X X
Glynn & Abzug 2002 AMJ X
Fiol 2001 JM X #
LaBianca et al. 2001 OS X #
Lounsbury & Glynn 2001 SMJ X X
Fiol 2002 OS X
Hatch & Schultz 2002 HR X
Whetten & Mackey 2002 Business & Society X X
Corley 2004 HR X
Corley & Gioia 2004 ASQ X X
Brickson 2005 ASQ X
Hsu & Hannan 2005 OSb
Ravasi & Schultz 2006 AMJ X
Martins 2006 OS X X #
TOTALS (counts of X’s) 32 24 (75%) 11 (34%) 7 (22%)
Notes: aASQ = Administrative Science Quarterly; AMJ = Academy of Management Journal; AMR = Academy of
Management Review; HR = Human Relations; IS = International Studies of Management & Organization; JM = Journal of
Management; OS = Organization Science; ROB = Research in Organizational Behavior.
b
Population Ecology Framework.
Legend: X denotes an explicit theoretical focus; # denotes an implied theoretical focus
418 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and enduring elements that Albert and
Whetten (1985) proposed. This dominant
approach seems to be consistent with what
psychologists label a ‘personal’ identity, one
that tends to be more individualistic, unique,
and idiosyncratic rather than a ‘social’ iden-
tity that classifies identities using socially
constructed systems of meaning. The empha-
sis on the more individualistic aspects of
organizational identity seems to have
emerged in spite of explicit theorizing about
the relevance of social identity theory to
organizations (e.g., Ashforth & Mael, 1989).
With regard to the strategic approach,
researchers have theorized organizational
identity as an ‘imitable strategic resource’ that
lends competitive advantage (Fiol, 1991).
Scholars have shown empirically that organi-
zational identity functions as a filter for inter-
preting and responding to strategic issues and
environmental changes (e.g., Dutton &
Dukerich, 1991; Elsbach & Kramer, 1996;
Gioia & Thomas, 1996; Gusftafson & Reger,
1995; Fox-Wolfgramm, Boal & Hunt, 1998),
shapes organizational units and professional
groups’ claims to strategic resources (Glynn,
2000), affects strategic response to institu-
tional (regulatory) change (e.g., Fox-
Wolfgramm et al., 1998), and is the result of
strategic change, such as mergers (e.g.,
Corley & Gioia, 2005). The strategic
approach seems to have found a basis in the
notion of identity ‘claim’: Ashforth and Mael
(1996) explicitly state that ‘claim’ relates
organizational identity to strategy, and Porac,
Wade and Pollock’s (1999) definition of iden-
tity construction as ‘an explicit claim that an
organization is of a particular type.’
Only infrequently has organizational iden-
tity been theorized explicitly in terms of the
institutional dynamics and environment
which embed organizations. This work tends
to paint institutional forces in terms of broad
strokes (e.g., Glynn, 2000; Czarniawska &
Wolff, 1999) that emphasize isomorphic
pressures towards conformity and constraint
(Fox-Wolfgramm et al., 1998; Glynn &
Abzug, 2002). Less evident are the more
enabling aspects of institutionalism in
crafting identity (e.g., Lounsbury & Glynn,
2001).
The relatively less attention given to insti-
tutional theory in the organizational identity
literature is ironic, because these two perspec-
tives are intertwined. Several institutionalists
recognize this connection. For instance,
Pedersen and Dobbin (2006: 897) observe:
‘Formation of identity through uniqueness
and construction of legitimacy through uni-
formity are two sides of the same coin.’ Scott
(1995: 22) remarks that ‘identity theory’ (at
the individual level) emerged as a corrective
to an over-socialized view, modeling an
active and reflective self that creates, sus-
tains, and changes social structures; he writes
‘Identities are viewed as “shared social mean-
ings that persons attribute to themselves in a
role” … (they) are socially produced by actors
who locate themselves in social categories
and interact with others in terms of these cat-
egories’; ‘self-meanings’ that are acquired in
specific situations, and symbolically defined
and reflexively managed. In the next section,
I try to rebuild this connection by offering
ideas on how institutional theory might
inform research on organizational identity.
INSTITUTIONS AND IDENTITY IN
ORGANIZATIONS
It seems that the central question of iden-
tity – Who are we as an organization? – has
been answered in the existing literature
primarily in terms of an individuated and
distinctive constellation of attributes
(see Table 16.1). The focus is on naming the
central, distinctive and enduring attributes
that define the ‘essence’ of the organization.
Organizational identity thus becomes a claim
of uniqueness and a point of strategic differ-
entiation from other organizational actors in a
field or market. Cerulo (1987), in her review
of the literature on the sociology of identity,
cogently describes the essentialist approach:
‘natural’ or ‘essential’ characteristics [are those]
qualities emerging from physiological traits,
 BEYOND CONSTRAINT: HOW INSTITUTIONS ENABLE IDENTITIES
psychological predispositions, regional features, or
the properties of structural locations. A collective’s
members were believed to internalize these
qualities, suggesting a unified, singular social
experience, a single canvas against which social
actors constructed a sense of self (Cerulo, 1997:
386–387).
An institutional answer to the identity
question (posed above) would not be in terms
of an organization’s essence but, rather, in
terms of an organization’s membership in a
social category. Identity, according to institu-
tionalists, is a set of claims to a social
category, such as an industry grouping, a
status ranking or an interest set. And so, an
organization might be identified as a Top 20
school, a Fortune 500 firm, or a hospital (and
not a bank), for instance. Thus, institutional-
ists focus on claimed similarity (to other
category members) as the basis of identity
and institutional alignment with the prevail-
ing constitutive rules that are used to define
identity.
A number of organizational identity
researchers offer some telling glimpses into
how institutions – and processes of institu-
tionalization – might surface more fully in
the dynamics of identity construction,
change, and performance. For instance,
Czarniawska and Wolff (1998) contrast the
essentialist (psychologically-grounded)
approach with more sociological or
structuralist approaches. These authors
conducted case studies of two universities
and concluded that identities (and their
successes or failures) are shaped in
institutional fields. Their work supports the
central tenet of institutional theory, that
isomorphism legitimates but allows for
limited cases of organizational deviance
from institutionalized and legitimated
templates.
Fox-Wolfgramm et al. (1998) conducted a
longitudinal case study of two banks, exam-
ining the organizational response to regula-
tory change in banking. They found that
organizational identity, which was linked to
strategic posture (Defender or Prospector),
affected an organization’s compliance or
419
resistance to the institutional change; they
proposed that ‘Organizations whose identity
and image are inconsistent with institutional
pressures for change will resist change
attempts’ (Proposition 1) and, in turn, that
‘Evidence of organizational success will be
used to reinforce and justify an organiza-
tion’s identity’ (Proposition 2).
In their studies of organizational names,
Glynn, with Abzug (1998, 2002) and with
Marquis (2004; 2006), showed how key
markers of organizational identity (organiza-
tional names) are embedded within institu-
tional fields. Additionally, they showed that
identity isomorphism legitimates – names
that closely resemble the institutionalized
template tend to be more comprehensible
(Glynn & Abzug, 1998, 2002) – but that
external changes in institutional environ-
ments can change legitimacy dynamics and,
in turn, affect organizational survival (Glynn
& Marquis, 2004). In an extension, Glynn
and Marquis (2006) show that isomorphism
may not have universal appeal; rather, that
individuals have differing preferences for
conformity and differ in the extent to which
they see institutionally isomorphic names as
legitimate.
Structural accounts of organizational
identity direct attention to the relational,
positional and embedded influences that can
stem from institutional environments. Here,
identity is conceptualized as an actor’s posi-
tion or role within an established set of
categories that define an industry, social net-
work or labor market, rather than a set of
essential attributes. For instance, Zuckerman,
Kim, Ukana, and von Rittmann (2003) define
identities in terms of a movie actor’s abilities
or skills to signal their membership in one
particular film genre (a simple or ‘focused’
identity) or several genres (a complex or
‘robust’ identity). Rao, Monin, and Durand
(2003) studied how identity movements,
which they define as arising ‘in opposition to
the dominant cultural codes, [and] consist of
a “we-feeling” sustained through interactions
among movement participants’ (p. 796),
drove changes in French cuisine over time by
420 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
generating identity-discrepant cues that led
chefs to abandon the old institutional logics
and role identities and embrace the new.
Thus, from the few studies that do attend
to how institutions surface in organizational
identity, we can see that they shift the focus
and dynamics of theorizing identity. Viewing
organizational identity through an institu-
tional lens directs attention to the social
meanings and structures that embed organi-
zational identities and induce conformity.
This perspective offers a counterpoint to the
prevailing theories of identity that tend to
characterize it in terms of essential central,
distinctive, and enduring attributes (e.g.,
Albert & Whetten, 1985). A focus on
institutional isomorphism is particularly
salient for non-instrumental or symbolic
aspects of organizations (Oliver, 1991), espe-
cially identity (Glynn & Abzug, 1998, 2002;
Glynn & Marquis, 2004). And, because it
complements the essentialist and strategic
approaches to organizational identity, it
offers the promise of a more comprehensive
approach to organizational identity.
For the remainder of this chapter, I focus
on three distinct ways in which institutions
can enable organizational identity. First, in
theorizing identity, institutionalism supplies
a complementary explanation to essentialism
that is not entirely organization-centric.
Rather, institutional suggests that it is the
social embeddedness of the individual
identity elements that accounts for why these
elements matter, when they matter, how they
might develop, evolve and change over time,
and how they complement (or conflict with)
each other. Thus, institutional theory can
deepen dominant theories of organizational
identity by illuminating the processes by
which organizations construct the essence of
their identity, i.e., their central, distinctive,
and enduring character (Albert & Whetten,
1985).
Second, institutions (and associated
institutional meanings and symbols) provide
the raw material from which organizational
identities are constructed. And so, organiza-
tional identity construction becomes a form
of institutional bricolage, where an identity is
cobbled together from existing elements or
bits of meaning, symbols or values:
Organizations appropriate bits of institu-
tional understandings but combine (and
recombine) them in institutionally
sanctioned ways so as to introduce varia-
tions. Organizations combine similar institu-
tionally-based identity elements in different
configurations so as to make their identities
distinct from each other within organiza-
tional fields but similar enough within a field
so as to make their membership claims (to
the field) legitimate. Thus, organizational
identities function in ways that are similar
to those of individuals in that they seek
‘optimal distinctiveness’ (Brewer, 1993)
within institutionally-bounded social
categories.
Third, institutions enable not only organi-
zational claims of identity but also their
enactment or implementation. The institu-
tional elements that organizations appropri-
ate to construct their identities embed not
only meanings but also performance scripts,
i.e., normative guidelines on organizational
appropriateness that inform action and insti-
tutional logics that rationalize action. Thus
action can be as much a part of identity
dynamics as meaning, symbolism and strate-
gizing; this is an important way in which
institutions can extend current theorizations
of identity, which tend to focus more on
meaning and change rather than the action or
performance imperatives of identity. I dis-
cuss each of these three aspects whereby
institutions enable identity.
Institutionalizing the essence of
identity
Building from the identity framework that
has dominated the literature (Albert &
Whetten, 1985), I examine how institutional
theory might be useful in deepening the indi-
vidual elements of organizational identity.
Albert and Whetten (1985) treat organiza-
tional identity as a trinity, composed of three
 BEYOND CONSTRAINT: HOW INSTITUTIONS ENABLE IDENTITIES
key criteria, that ‘of central character,
distinctiveness, and temporal continuity’
with ‘each necessary, and as a set sufficient’
as an adequate statement of identity (p. 265).
I consider each of these three elements
in turn.
Identity as central
The first of the three identity elements, that
of claimed central character, describes the
very ‘essence’ of an identity and is used by
leaders ‘as a guide for what they should do
and how other institutions should relate to
them’ (Albert & Whetten, 1985: 267,
emphases added). Thus, even the essential-
ism of centrality, it seems, implies an inter-
organizational (and perhaps institutional)
environment which enrobes the organization.
A more explicit statement on central
character is made by Brickson (2005) in her
model of identity orientation. She describes
this as a particular posture towards individu-
alism, relationalism or collectivism; she con-
tends that this attribute will always be one of
the characteristics defined as central, distinc-
tive and continuous as an identity element.
Note how this typology of identity orienta-
tions, with its ‘isms,’ has ideological roots
that position the actor (the self or the
organization) both in a social environment
and in relation to others.
Even the core element of centrality seems
to hinge the organizational identity to the
inter-organizational or institutional environ-
ment. Albert and Whetten (1985) suggest that
identity locates organizations in social or
institutional space. Their fundamental notion
of identity as an organizational claim hints at
a collective’s basic struggle to self-name,
self-characterize and assert social preroga-
tive and raise questions about the viability of
‘essentialism’ in identity construction
(Cerulo, 1997); Cerulo (1997) writes of an
anti-essentialist perspective, which implies
institutionalism:
Recent treatments of collective identity question
the essentialism of collective attributes and
images. Anti-essentialist inquiries promote the
social construction of identity … every collective
421
becomes a social artifact – an entity molded, refab-
ricated, and mobilized in accord with reigning cul-
tural scripts and centers of power. (387)
In a study of identity claim-making
during the musicians’ strike at the Atlanta
Symphony Orchestra, Glynn (2000) showed
how the core of organizational identity was
contested by the two major professional
groups in the orchestra: musicians and
administrators. Each advanced claims to a
particular identity, each attached to identity a
different core ideology, i.e., aestheticism (in
musical performance) versus economics (in
fiscal responsibility). The study highlights
how identity can be a source of mobilization,
rather than just a product of it; this differs
from the dominant view which tends to
model the organization’s central character as
emerging from its founding, historical trajec-
tory and a shared or collective view of the
organization. Hybridization of identity, in
complex organizations like a symphony,
shows how a single organization may have a
multiplicity of claims on its central character.
In many ways, then, even the core charac-
ter of organizational identities implies insti-
tutional space and a set of social categories
that offer meaningful ways of describing
organizations (e.g., as a church or a business,
as Albert and Whetten suggest). These
categories (or their typifications) are defined
by a set of symbolic boundaries that function
in the construction of valued identities
(Lamont, 1992). Moreover, boundary
strength, i.e., only those boundaries firmly
grounded in widely shared meaning,
prove sufficiently strong to generate hierar-
chy and confer value to collective identities
(Lamont, 1992).
Thus, institutionally-based categories can
describe cultural repertoires of meaning that
organizations can appropriate to address the
question of ‘who we are.’ The response
simultaneously characterizes their central
character but also classifies them as a
member of one organizational field and not
of others; category partitions (or boundaries)
distinguish them from other organizations
or social communities. Even as a claimed
422 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
central character may reflect core organiza-
tional values or strengths (e.g., integrity, fair
trade, technology leader, customer-oriented,
family friendly, etc.), it nonetheless
implicates a set of institutional categories
and boundaries from which this character
draws meaning. In many ways, then, this
seems to have been an under-specified
aspect of organizational identity that institu-
tionalism might help to explain.
Identity as distinctive
Identity distinctiveness and prestige surface
in several studies conducted at the individual
level of analysis that examine organizational
members’ perceptions of, and identification
with, their organizations. Mael and Ashforth
(1992) studied the antecedents of alumni’s
identification with their organization, a
religious college, and found that it was
positively influenced by their perceptions of
organizational distinctiveness and prestige.
They concluded:
In general, symbolic management can be directed
towards increasing the salience of the institution
as an institution, complete with a unique and com-
pelling mission and a reputation for fulfilling that
mission. (Mael & Ashforth, 1992: 14, emphasis in
the original)
Similarly, Bhattacharya, Rao and Glynn
(1995), in a survey of art museum member-
ship, found that fee-paying members’ identi-
fication is positively related to perceived
organizational prestige. Thus, as much as
distinction serves to differentiate one organi-
zation from another, it also seems to function
as a touchstone for individuals’ identification
with the organization and its identity; for
both individuals and organizations, such
distinctiveness can enhance perceptions of
the self.
Organizational identity researchers have
examined how identities respond to status
rankings, particularly those by external third
parties. Elsbach and Kramer (1996) show how
business schools can shift the bases of their
distinctive character to preserve their prestige
and esteem in response to a drop in the
Business Week rankings; the distinctiveness
that is claimed is relative to a particular cate-
gory of organizations (e.g., Top 20 Business
Week list). Other scholars have shown how
identities have a reciprocal relationship with
the external image of the organization
(e.g., Dutton, Dukerich & Harquail, 1994;
Gioia, Schultz & Corley, 2000; Gioia &
Corley, 2002), with identities shifting so as to
enhance their reputation with important
stakeholders. Working at a different level of
analysis, organizational ecologists also attest
to how identities are ‘conferred by an audi-
ence’ (Hsu & Hannan, 2005: 478) in an effort
to garner stakeholder acceptability.
Implicit in identity distinctiveness is not
only the enhancement of the reputation or
image of the organization, but also cues that
enable external audiences to perceive the
organization as legitimate and appropriate; if
organizations are perceived to conform to
desirable identity categories, then stakehold-
ers tend to sanction that organization and
resource flows are beneficial. The process of
identity distinctiveness is the flip side of
isomorphism (or conformity to institutional
forces), as Pedersen and Dobbin (1997: 432)
have pointed out in their description of
enumeration.
Institutionalists ground the notion of iden-
tity distinctiveness within processes of
isomorphism; distinctiveness (or enumera-
tion) occurs within identity categories, as
organizations distinguish themselves from
other members of the class. However,
distinctiveness does not occur in an institu-
tional vacuum; isomorphism not only
legitimates but it encourages differentiation
and the distinctiveness which can follow.
Further, this institutional explanation of
identity distinctiveness can illuminate the
relationship among the three core identity
elements, suggesting a possible hierarchy
of distinctiveness embedded within claims of
central character.
Identity as enduring
Of the three identity elements articulated by
Albert and Whetten (1985), the claimed tem-
poral continuity or durability of identity has
 BEYOND CONSTRAINT: HOW INSTITUTIONS ENABLE IDENTITIES
perhaps been the most contested by other
researchers. Gioia, Schultz and Corley
(2000) characterized organizational identity
as having ‘adaptive instability,’ changing in
response to others’ images of the organiza-
tion. They argue that identity continuity
implies flexibility (instability) with regard to
a core central character, as external
audiences can destabilize identity, causing
the organization to reconsider the framing or
constitution of its identity. Subsequent work
by two of these authors (Corley & Gioia,
2004) examines identity change processes
during the strategic change of a corporate
spin-off; they find that identity change does
occur and that the organizational leadership
has to manage that change.
Other challenges to the enduring nature of
identity arise from Biggart’s (1977) study of
the US Postal Service and Fiol’s (2002) study
of a high technology company. Both of these
researchers demonstrate that previously
valued aspects of the organization’s identity
had to be discredited before employees could
buy into a new way of approaching their
business, thus requiring a changing identity.
Similarly, Reger et al. (1994) observed that a
fundamental organizational change, such as
the implementation of a total quality initia-
tive, required a fundamental change in how
the organization thought of itself. Rao,
Monin and Durand (2003) demonstrated how
identity movements that opposed the old
institutional logics were essential to the con-
struction of new role identities. And Hatch
and Schultz (2002) proposed a model of
organizational identity dynamics that
specified processes by which organizational
identity emerges from the unending conver-
sations that occur between members of an
organizational culture and its many
stakeholders.
Researchers have challenged Albert and
Whetten’s (1985) identity element of tempo-
ral continuity and have done so by mapping
changes that arise from the organization’s
strategic, industry and institutional environ-
ments. However, as much as institutional
change may prompt organizational change,
423
it does tend to set the limits on the scope and
scale of this change. Pedersen and Dobbin
(1997: 436) note that the notion of change
and differentiation itself has been institution-
alized and so identity change tends to occur
within narrowly defined categorical bound-
aries: ‘Presidents and kings actively distin-
guished their nation-states from others, but
they did so in routine ways. The dimensions
of identity were clearly institutionalized.’
The preceding section illuminated some of
the ways in which institutions are implicated
in current theories of organizational identity
and particularly in each of its core identity
elements – central character, distinc-
tiveness and temporal continuity. The con-
struction of the organization’s identity also
implies the construction of a social actor
through a process of categorization (that
form the basis of claimed central character),
enumeration (that forms the basis of distinc-
tiveness), and isomorphic alignment that
legitimates (that forms the basis of continuity
and change).
Organizational identity as a form of
institutional bricolage
Although organizations can construct identi-
ties that reflect their central and distinctive
attributes, they typically do so with compo-
nents available in their institutional environ-
ment, i.e., the industry, organizational field,
societal culture and/or the nation-state. For
instance, Glynn and Abzug (2002) found that
organizations changing their names made
choices that aligned them with prevailing
institutional practices and templates; Fred’s
Bank was as unlikely a choice to name an
organization’s identity as First Federal Pizza.
In narrating the identity of their new ven-
tures, Lounsbury and Glynn (2001) found
that entrepreneurs employ elements from
widespread identity stories as ‘raw material’
when negotiating their emerging identities.
More generally, people can be artful in their
mobilization of different institutional logics
to serve their purpose (Westenholz, 2006).
424 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Symbols that ‘mark’ an organization’s core
identity as central (or even unique) ironically
are often composed of common components
established within organization fields. Glynn
and Abzug (1998; 2002) demonstrated this in
their studies of the names that organizations
chose to adopt when they changed their name;
they examined the explanatory power of an
institutional view (predicting symbolic iso-
morphism) and a strategic view (predicting
uniqueness). They found robust effects for
institutional predictions.
Relatedly, in work on organizational cul-
tures, Martin, Feldman, Hatch and Sitkin
(1983) make a similar point: ‘Organizations
claim uniqueness, but at any point in time,
organizations claim similar sorts of unique-
ness’ (p. 901). These authors observed that
‘Building blocks of conscious organizational
culture often come from the environment, with
the result that distinctive organizational cul-
tures can be surprisingly similar to one another
at any point in time’ (p. 901). A similar view is
echoed in work describing the uniqueness par-
adox in organizational stories (e.g., Martin,
Feldman, Hatch & Sitkin, 1983); organizations
may claim a central and unique narrative, but
they tend to be similar (or isomorphic) to other
organizations in the very claim that they make.
Future research on organizational identity
might advance our understanding on the
wider models in the institutional field from
which organizational identities are con-
structed. It would be of interest to examine
whether organizations draw their identity’s
central, distinctive and enduring characters
from more local environments (such as
industry or geographic clusters), from more
distal or universal environments (such as
nation-states or global trends), or from some
combination of both. Some of these cultural
models available are what Pedersen and
Dobbin (2006) describe: ‘The appropriate
cultural artifacts of identity formation were
traditions (e.g., language, couture, cuisine)
and newly created symbols (e.g., flags,
anthems, constitutions).’ As Swidler (1986)
reminds us, culture serves as a kind of
‘toolkit’ from which organizations can draw
identity elements. Thus, the process of iden-
tity construction becomes the process of
institutional bricolage, where organizations
incorporate cultural meanings, values, senti-
ments and rules into their identity claims.
Identities can thus be bricolaged or cob-
bled together from shared cultural elements
and symbols and it is in this way that they
can come to resemble each other. Although
there may be shared elements, they are
nonetheless combined in fairly unique and
distinctive ways. In this manner, then, organ-
izations can accommodate both central and
distinctive elements by claiming uniqueness
but doing so with innovative combinations of
institutionalized elements. Moreover,
although identities are constructed from
shared cultural models, they are negotiated in
the organization and in the organizational
field (Westenholz, Pedersen & Dobbin,
2006). Moreover, the very process of brico-
lage, whereby different elements are con-
joined, carries implications for the both the
distinctive and enduring aspects of identities.
When organizations appropriate institutional
elements from different – and especially
oppositional categories – they can erode the
boundaries that compartmentalize these ele-
ments and thus blunt distinctiveness. Rao,
Moniin and Durand (2005) describe such
erosion in the context of nouvelle and classi-
cal cuisines’ boundaries becoming under-
mined by innovative appropriation. Glynn
and Lounsbury (2005) similarly provide an
account of such blending processes for the
symphony’s repertoire in appropriate pieces
from both the traditional musical canon as
well as more contemporary art forms. Thus,
the process of identity construction comes to
resemble a process of institutional bricolage,
the elements and processes of which invite
closer scrutiny by future identity researchers.
Identity not only as claims, but
performance
Although the focus in the organizational
identity literature has been on claim-making,
 BEYOND CONSTRAINT: HOW INSTITUTIONS ENABLE IDENTITIES
institutionalism alerts us to another dimen-
sion of identity construction: identity-driven
performance and action. Institutionalized
identities and frames come with expectations
about how actors should perform an identity
in specific situations (Eliasoph &
Lichterman, 2003). When social identities
and frames are put to use in practical per-
formance, their meaning and relevance is
reaffirmed as subjective experience.
Institutions are thus ‘embodied in personal
experience by means of roles’ (Berger &
Luckmann, 1966: 74).
The identity literature comes closest to this
view in its articulation of strategic identities,
which are viewed as resources leveraged for
competitive advantage. Although identities
can certainly guide strategic behavior, they
may do more than that; they can ensure orga-
nizational survival. Selznick (1956: 63)
expresses it directly: ‘Institutional survival,
properly understood, is a matter of maintain-
ing values and distinctive identity.’
Organizational fields are characterized by
institutional logics, which Meyer, Boli and
Thomas (1987) define as cultural accounts;
logics endow the actors and actions in the
field with meaning and legitimacy. Thornton
and Ocasio (1999: 804) offer a similar defini-
tion, but draw out more explicitly the produc-
tion of actions consistent with this logic; they
define logics as ‘the socially constructed,
historical pattern of material practices,
assumptions, values, beliefs, and rules by
which individuals produce and reproduce
their material subsistence, organize time and
space, and provide meaning to their social
reality.’
In his compelling book and video, show-
casing Don Quixote as a model for leader-
ship, Jim March focuses on identity. As
March tells it, Quixote balances passion with
discipline, which stems from Quixote’s iden-
tity, his precise sense of himself. Not only is
Quixote aware of the consequences of his
actions (which are governed by the logic of
consequence), but is also very aware of the
demands of his identity, his role in the world.
He asks himself: Who am I? What situation
425
am I in? What does a person like me do in a
situation like this? Thus, passions are disci-
plined not by incentives, but by identity.
Thus, the logic of identity offers a counter-
point to the logic of consequence that typi-
cally dominates organizational thought.
Identity, then, can function as kind of insti-
tutional logic (Friedland & Alford, 1991) that
governs organizational behavior and choice;
although it can at times limit choices, it also
enables and advances action because identi-
ties are performed. They function as a kind of
institutional logic, a set of ‘shared rules and
typifications that identify categories of social
actors and their appropriate activities or rela-
tionships’ (Barley & Tolbert, 1997: 96).
Action is implicated and, in the performance
of identity, institutions themselves can be
transformed. Thus, institutionalists alert us to
a relatively unexplored aspect of organiza-
tional identity: its performance.
POTENTIAL CONTRIBUTIONS OF
INSTITUTIONAL THEORY TO THE
STUDY OF ORGANIZATIONAL
IDENTITY
At first blush, theories of institutions and the-
ories of identity seemed to be almost anti-
thetical. They operate at different levels of
analysis and seek different explanations for
organizational sameness and differentiation.
Institutionalists look for similarities among
organizations in a field; organizational iden-
tity theorists look for similarities among
individuals in an organization. More gener-
ally, as Pedersen and Dobbin (2006: 900)
observed in their study of institutions and
organizational cultures: ‘institutionalists
look for interorganizational convergence,
isomorphism, and meaning construction
through interorganizational paradigm
construct; organizational culture researchers
look for organizational divergence, polymor-
phism, and identity construction through
collective sensemaking.’ And yet, they are
fundamentally circular in their effects; two
426 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
sides of the same coin, as Pedersen and
Dobbin (2006) remind us.
A useful approach to relating these two
perspectives is that of mechanism-based
theorizing; this approach relates variables at
one level of analysis to those at a different
level of analysis. It suggests a bridge that
could be built between institutionalists’
emphasis on the inter-organizational environ-
ment and identity’s emphasis on the intra-
organizational environment. As Davis and
Marquis (2005: 335) explain: ‘If regressions
reveal the relationship (wind a watch and it
keeps running), mechanisms pry the back off
the watch and show how.’
The framework of Hedstrom and
Swedberg (1998) maps two mechanisms that
move across levels of analysis and are
relevant to institutions and identity: situa-
tional mechanisms, that explain how vari-
ables at a macro-level affect those at more
micro-levels (e.g., effects of regulatory law
on employment practices; new market pres-
sures on industries such as education or
health care; an organization’s layoffs on
employee motivation) and transformational
mechanisms that explain how micro-level
actions or variables alter macro-level patterns
at a higher level of analysis (e.g., diffusion of
one’s organizational HR practices to the
field; the activism of social movements that
changes civil law or organizational policies
on environmentalism). And, although I have
focused on situational mechanisms where
institutions enable identities, surely transfor-
mational mechanisms alter fields by
aggregating or leveraging potent organiza-
tional-level identities.
Institutional theory implies three basic sets
of situational mechanisms that operate on
organizations: the normative (or value-laden)
expectations of institutional fields or
industries; cognitive ‘guidance systems’ that
supply abstract structures of meaning; and
regulatory or coercive forces that can limit
identity choices. (e.g., prescribing the use of
terms like ‘Incorporated’ in a name or
trademarking unique organizational logos).
In this chapter, I have focused on the first two
of these mechanisms: socio-normative and
cognitive. And, although institutional mecha-
nisms have been typified as constraints that
narrow possibilities for identity construction
and choice, I have argued that institutions
enable organizational identities in three basic
ways: by formulating the essential identity
elements (centrality, distinctiveness and
durability); by supplying the ‘raw’ cultural
materials that organizations assemble in a
process of institutional bricolage to achieve
‘optimal distinctiveness’ (Brewer, 1993)
within institutional fields; and by motivating
performance in organizations in a way that is
governed by the institutional logics of
identity. In all these processes, I have
acknowledged how institutions can induce
variations, as well as temper them.
More generally, I have tried to show how
identity-making processes are shaped both
by wider cultural accounts circulating in
broader fields of meaning (industry; nation-
state) as well as more specific (and perhaps
historical) accounts of organizational charac-
ter that reflect the essential aspects of the
firm. Despite the fact that organizations
assemble similar institutionalized identity
elements, variations are possible because of
the transposability (Sewell, 1992), mutuabil-
ity (Clemens & Cook, 1999), and recombina-
tory possibilities of institutional scripts
(Powell, 1991).
Institutions serve up the resources for
identity-work in organizations by supplying
cognitive templates for both the form (gram-
mar) and content (meanings; symbols) of
organizational identities. Further, by
sanctioning (or legitimating) some particular
identity representations (or symbols) over
others, an institutional perspective on
identity suggests that some identities may be
more potent than others in particular histori-
cal periods.
Thus, in demonstrating their social fitness,
organizational identities can resonate with
audiences and develop cultural power,
i.e., ‘the capacity of certain works to linger in
the mind … to enter the canon’ (Griswold,
1987: 1105). Ironically, cultural power stems
 BEYOND CONSTRAINT: HOW INSTITUTIONS ENABLE IDENTITIES
less from organizational individuation and
distinctiveness and more from its institu-
tional situatedness, as Griswold (1987: 1105)
explains: ‘A powerful work … locates itself
within a set of conventions that it strains,
plays with, perhaps inverts, but does not
totally ignore … intrigues or disturbs its
recipients without utterly mystifying or frus-
trating them.’ In this way, then, institutions
can enable not only identity construction but
also identity legitimacy and potency. Further,
when identities are potent, they persist.
Persistence (over time) may arise not only
because of organizational strategy or inertia,
but because institutional pressures sanction
certain types of identity symbols and
practices as potent. Identities thus can strike
such a resonant chord that they endure
in their vibration, becoming almost
indestructible.
Issues of identity potency and resonance,
derived from institutional alignment, raise
several intriguing questions for future
researchers to pursue. One question again
challenges the enduring nature of identity,
but focuses less on shortening its lifespan
and more on lengthening it: Is there more
continuity in organizational identity than one
might expect? Do cultures (or societies or
nation-states) have a preference for
remembered identities such that they press
for persistence, in spite of identity threats?
Other questions introduce a more active role
for the institutional environment and key
institutional actors. We can redirect current
leanings towards explaining identity
preferences and sanctioning by organiza-
tional members. An institutional approach
might lead us to a different question: Do
cultures (or societies or nation-states)
sanction certain types of identities at differ-
ent points in time?
Finally, although the focus of this chapter
has been on how institutional theory
can inform models of organizational identity,
the reverse is also true: organizational
identity theories can inform institutionalism.
For instance, a widespread critique of neo-
institutionalism points to its overemphasis
427
on exogenous models of change (Barley &
Tolbert, 1997; Farjoun, 2002). However,
when organizational identities are conceptu-
alized as part of a particular institutional field
or industry, attention is redirected towards
modeling institutions as endogenous, the
result of organizational appropriation of
shared institutional elements and logic but
with a multiplicity of variations. And finally,
identity construction can afford a way of
introducing agency into institutional
accounts of change. By modeling how organ-
izations actively craft identities from avail-
able cultural toolkits (Swidler, 1986),
combining (or recombining) identity ele-
ments to achieve both sameness (with appro-
priate cultural scripts) and differentiation
(from other organizations), theorists intro-
duce aspects of organizational choice, and
creative deviation that are institutionally
informed but not necessarily mandated. Such
a perspective would take the institutionalism
of identity beyond a model of constraint to
one that enables and enriches identity
construction in organizations.
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Institutionalism and the
Professions
Kevin T. Leicht and Mary L. Fennell
The study of the professions, as they are
defined in the developed world, has been
deeply intertwined with institutional theory
and topics central to institutional theory
(legitimation, symbolism, isomorphism,
decoupling, power, agency, and organiza-
tional fields). The professions represent the
quintessential triumph of Durkheimian occu-
pational communities over and above the
mass-society-based anonymity of impersonal
markets and the grinding rigidity of bureau-
cracies. But, as we’ll see, the classic
autonomous, peer-oriented professional
practice is under pressure from institutional
constituents interested in lower costs, more
accountability, and ethical transparency at
the same historical moment that technologi-
cal changes put pressure on traditional,
institutionalized methods for delivering
professional services. The combination of
new places, new people, new technologies,
and new clients has pushed professionals in
new and uncharted directions.
In this chapter, we examine recent devel-
opments in the study of professional work
through the lens of institutional theory.
The delivery of professional services is
17
undergoing changes in the markets, organiza-
tional forms, and technologies that provide
fertile ground for the use and extension of
institutional theory. The institutional norms
of several key professional sectors are
changing drastically as well as the assump-
tions about market structures and the nature
of technological changes currently at the
forefront.
For the purposes of this chapter, we define
professional work as occupational
incumbents: (a) whose work is defined by the
application of theoretical and scientific
knowledge to tasks tied to core societal
values (health, justice, financial status, etc.),
(b) where the terms and conditions of work
traditionally command considerable auton-
omy and freedom from oversight, except by
peer representatives of the professional
occupation, and (c) where claims to
exclusive or nearly exclusive control over a
task domain are linked to the application of
the knowledge imparted to professionals as
part of their training (Leicht and Fennell
2001: 25–30). This definition encompasses
the traditional classic professions (physi-
cians, lawyers, and university professors) but
432 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
also includes other abstract workers and
symbolic analysts such as accountants,
pharmacists, engineers, and scientists.
In the next two sections we look briefly at
the more traditional literature on the profes-
sions, and then move on toward contemporary
institutional theory and the ways in which it
has addressed the professions and the organi-
zational structures where professional work is
done. Finally, we develop an updated version
of an institutional analysis of the professions,
focusing on change within professions them-
selves, change in the relative importance of
institutional and technical environments, and
demands for greater transparency and
accountability following well-known ethical
scandals that resulted in significant harm to
clients and employees. Our analyses through-
out will draw heavily (though not exclusively)
from research on the health and medical pro-
fessions, where the impact of institutional
change has been substantial.
PRIOR LITERATURE ON
THE PROFESSIONS AND
PROFESSIONAL PRACTICE
Sociological theory on the professions
moved away from trait theories (theories that
defined professions based on a series of fixed
characteristics such as credentials, codes of
ethics, and knowledge mastery) in the late
1960s and 1970s. The prevailing movement
was toward models of professional organiza-
tions and knowledge claims (Leicht and
Fennell 2001). These new models of profes-
sions and professional practice moved
beyond the conception of professional organ-
ization as a rational, goal-oriented system
designed around core tasks carried out and
controlled by professionals themselves
toward organizational and institutional
claims regarding professionals and their
activities. Other classic studies of ‘profes-
sionalism’ as a historical process have
emphasized the political and social power of
professional groups in medicine (Larson
1977; Starr 1982), and management account-
ing (Johnson and Kaplan 1987). More recent
historical work on the professions has exam-
ined the export of western professional ideals
on economic and legal systems to Latin
America (Garth and Dezalay 2002),
emphasizing the impact of local political
struggles on the success or failure of such
export attempts.
Early sociological efforts to consider both
professional work and the structures within
which that work takes place are best exempli-
fied by models developed by Scott (1992)
and his colleagues. Scott discussed three
models for embedding professionals in
organizations. Autonomous organizational
forms represent the ideal-typical practice set-
ting where professionals retain authority to
control and evaluate themselves as a group.
Heteronomous organizational forms subject
professionals to more line-authority control,
as exemplified by healthcare managers in
today’s managed care organizations.
Conjoint organizational forms produce sepa-
rate domains of power controlled by profes-
sionals and administrators who recognize the
shared benefits of their division-of-labor and
collaboration.
The different dimensions of professional
work that are subject to change have been
discussed by Friedson (1986) and Hafferty
and Light (1995). Changes in the actual
content, or technical core, of professional
work refer to specific decisions made and
procedures used during task performances.
In medicine the proliferation of practice
protocols and research on medical effective-
ness represent examples of attempts to limit
control over the content of professional
work. Changes in the terms of work refer to
characteristics of the professional work
contract (pay, hours worked, and reimburse-
ment arrangements). The replacement of
fee-for-service delivery with salaried work
conducted according to fixed schedules
would be an example of changes in the terms
of work. Finally, changes in the conditions
of work refer to changes in the organiza-
tional structures, staffing arrangements, and
 INSTITUTIONALISM AND THE PROFESSIONS
resources made available for professional
practice. The rising expectation that
academic scientists will produce patentable
discoveries and large research grants to pay
for their laboratory infrastructure would be
an example of this change. Changes can
occur in any of these domains independently,
but changes in the terms and conditions of
work often have implications for the content
of work that is performed.
Others have focused on systems of profes-
sions and knowledge claims among
professional groups (cf. Abbott 1988, 1991).
These researchers move away from studying
single professions in isolation toward studies
of professional groups who claim to control
the same (or very similar) task domains.
More important for our purposes, these
researchers also focus on the entire system of
professional claims within specific societies
and cultures. Systems of knowledge claims
are studied when boundary and domain
disputes develop among competing profes-
sional groups. These competitions determine
each group’s relative prerogatives and pres-
tige. Relatively prestigious occupations (e.g.
medical practice prior to the 1980s) rarely
have their task domains challenged by
competing groups. But this perspective
points out that there are far more cases where
professional task domains are contested (see
our discussion below of the relationship
between pharmaceutical companies,
scientists, and new technologies or our dis-
cussion of conflicts of interest between man-
agerial consulting and accounting practice).
Through watching these competitions in new
organizational and institutional arrange-
ments, researchers can study how task
domains are controlled and how challenges
to the conventional organization of profes-
sional practice occur.
Light’s (1993, 1995) theory of counter-
vailing powers is another variant of the focus
on systems of professions, a conception that
is echoed by Friedson (2001). The dynamics
of change in the status of professions is
linked to a profession’s location in a field of
institutional and cultural actors. This theory
433
builds on the concepts of agency theory to
discuss ways that competing professions
make countervailing claims to dominance
over specific task domains. Friedson’s work
(2001) follows in this tradition by claiming
that professions represent a ‘third logic’ for
the institutionalized organization of service
delivery as a Durkheimian alternative to
markets and bureaucracies.
CONTEMPORARY INSTITUTIONAL
THEORY AND THE PROFESSIONS
Institutional theory suggests that the regula-
tion of organizational behavior occurs
through and is a consequence of taken-
for-granted beliefs, schemas, and values that
originate in larger institutional contexts (cf.
Powell and DiMaggio 1991; Scott 1987;
Meyer and Rowan 1977; Greenwood and
Hinings 1996; Friedland and Alford 1991).
In most institutional accounts these beliefs,
schemas, and values are not primarily
responses to market pressures and efficiency
dynamics. Instead, these arrangements repre-
sent active responses to dominant sets of
norms, values and beliefs of key organiza-
tional actors (elite business managers,
partners in professional practices, key regula-
tors, and powerful clients). Specific ways of
organizing become archetypes that represent
coherent patterns of organizing in response
to underlying values and beliefs
(cf. Greenwood and Hinings 1993).
Mechanisms for enforcing institutional
configurations are the key to the establish-
ment and maintenance of a strong correspon-
dence between institutionalized values and
beliefs and methods of organizing. In institu-
tional theory these forces usually are
classified under the headings of normative,
coercive and mimetic pressures. Normative
pressures result from the socialization of
institutional actors into a set of beliefs that
define specific organizational arrangements
as the ‘best and customary’ way of organiz-
ing specific activities. Professional schools
434 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and professional associations are classic
examples of groups that exert normative
pressure through their socialization (and con-
tinued re-socialization) of occupational
incumbents. Coercive pressures result from
the actions of regulatory oversight agencies
and major resource providers. These stake-
holders have the ability to enforce their will
on organizational actors by conferring or
withdrawing legitimacy and resources.
Certifications, inspections, and claims to
speak for broader unorganized constituencies
(in addition to the sheer ability to pay large
fees, secure bank loans, and take legal
action) make coercive pressures in well-insti-
tutionalized organizational domains credible.
Mimetic pressure is a consequence of the
establishment of taken-for-granted methods
of organizing. Once specific organizational
practices dominate a specific field, resorting
to those practices as the best solution to a
problem is simply a matter of borrowing
from what others do.
More recently neo-institutional theorists
have been interested in examining change
processes (cf. DiMaggio and Powell 1991;
Greenwood and Hinings 1993; Oliver 1991).
There are two broad strands of institutional
research and theory that attempt to under-
stand change: (1) a tradition focusing on
variations in embeddedness in specific insti-
tutional contexts that promote specific orga-
nizational archetypes (cf. Greenwood and
Hinings 1993, 1996), and (2) a somewhat
less prominent tradition that talks about
strategic responses to institutional processes
(cf. Oliver 1991). In the first conception,
embeddedness in an institutional context
makes gradual change less likely and radical
(or revolutionary) change more likely.
Embeddedness also reflects the structure of
the institutional context – the extent that con-
texts are permeable and the extent that insti-
tutional monitoring practices are tightly or
loosely coupled. Not all organizations oper-
ate in highly institutionalized environments
(e.g., restaurants, big-box retailers), and
some environments are vulnerable to new
practitioners with different organizing logics
and archetypes (such as discount brokerage
houses, mail-order pharmaceuticals, internet
social-networking sites). Organizations
and/or the professionals within newly devel-
oping organizational fields can themselves
have significant influence on defining the
institutional logics that will become
imprinted upon that sector. Suchman’s work
on the legal community in Northern
California’s Silicon Valley provides an
excellent example of how local law firms
developed and ‘set’ legal patterns for linking
venture capitalists with startup firms in the
high tech sector (2003; Suchman et al.
2001). Greenwood and Suddaby’s (2006)
study of new forms of multidisciplinary prac-
tice firms in Canadian professional business
services provides another cogent example of
institutional change – entrepreneurship –
initiated from the center of a mature organi-
zational field.
In the second conception, strategic
responses to institutional processes, there are
a wide variety of responses to institutional
pressure, and simply following the norms
(acquiescence) is only one of those. In
Oliver’s conception, organizational leaders
can engage in compromise, avoidance, defi-
ance, and manipulation of the institutional
environment. These responses may vary
depending on how embedded the organiza-
tion is in the institutional environment in the
first place and the overall availability of alter-
native templates and logics for organizing.
In the next section we provide an exten-
sion of earlier institutional theory treatments
of the professions, by focusing on change
from several directions, including both inter-
nal and external changes. Specifically, we
assert that the professions have undergone
changes in their institutional environment
that reflect the following:
(a) changes from inside the professions as practition-
ers become more diversified demographically
and in terms of their professional interests and
specialization. Not only are the classic profes-
sions now populated by an unprecedented
ethnic, racial and gender diversity of practition-
ers, but continued professional specialization and
 INSTITUTIONALISM AND THE PROFESSIONS
rising earnings inequality threaten to undermine
what little professional solidarity remains.
(b) changes in the relative salience of institutional
and technical environments in altering the logics
of professional service delivery (cf. Scott, Ruef,
Mendel and Caronna, 2000; and D’Aunno, 2003).
Historically there have always been tensions
between concern for the overall institutional and
professional service ethos of professional activity
and the technical environment (markets, technol-
ogy, and innovation) where professional practice
takes place. We argue that many professions in
the past 25 years have seen shifts toward the
rising salience of the technical environment (mar-
kets and technologies) in relation to traditional
institutional concerns of professional practice
delivery. We argue that one of the environmental
precursors of this shift was the Keynesian crisis in
macroeconomics in the mid-1970s and the result-
ing questions this raised about a future post-
industrial society dominated by technical,
professionalized experts. The other contemporary
change is in the technological interface used by
professionals as they attempt to keep abreast of
new developments in information and nanotech-
nology. These developments, and the organiza-
tional responses to them, are especially apparent
in the healthcare professions where new tech-
nologies raise questions about old organizational
forms used to deliver healthcare services.
(c) demands for greater transparency and accounta-
bility in light of well-publicized scandals affecting
service delivery. These scandals are a product of
the new institutional environment for profes-
sional service delivery that highlight the fault-
lines between traditional conceptions of
professional practice and new avenues for exploit-
ing information gaps and the speed of transac-
tions between geographically dispersed clients.
CHANGES WITHIN PROFESSIONAL
GROUPS – DEMOGRAPHIC AND
INTEREST DIVERSITY
Growing demographic diversity
among professionals
One of the more obvious trends of the past 30
years is in the growing representation of
women and minorities (non-whites) among
435
professionals (see Leicht and Lyman 2006).1
The US trends on both fronts have been grad-
ual, but the overall change has been dramatic.
Women have gone from representing fewer
than two in every ten professional jobholders
to almost 50 percent, and much of this
increase has happened since 1980. The repre-
sentation of non-whites in the professions
has increased as well, but from a lower base-
line and with a much more gradual rise. The
representation of non-whites among profes-
sionals currently hovers around 12 percent.
By any standard, the slow but steady
demographic diversification of the profes-
sions is a reality that is here to stay. These
trends in demographic diversification are
most apparent among the professions closely
associated with business services; accounting
and law. Women constitute a near majority of
accounting practitioners (both CPAs and
non-CPAs), and women’s representation
among US lawyers has dramatically
increased as well. Women now constitute a
majority of students in US law schools and
a substantial percentage of students in US
accounting and business schools (although
Hammond (2002) shows that accounting has
not become more racially diverse). Perhaps
not coincidentally, accounting and law are
precisely the professional groups where the
reorganization of working arrangements and
the creation of the one-stop business service
firm (similar to the multidisciplinary practice
firm examined by Greenwood and Suddaby)
is most evident. This is a significant (but
certainly not the only) component of the
increasingly fragmented institutional
environment professionals face.
Growing earnings inequality among
professionals
There has always been (for the last 30 years
at least) considerable diversity in the earn-
ings of professionals and the earnings gaps
among professionals have been wider than
earnings gaps in the rest of the working
population. Assessing the growth in earnings
436 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
inequality among professionals is an
important (but far from the only) component
of assessing claims that the interests of pro-
fessionals are diversifying.
More interesting from the standpoint of
potential professional interests is that, since
1970, inequality has been rising more
drastically among professionals than among
the general population (Leicht and Lyman
2006). If professional practice (in part) repre-
sents the creation of common occupational
communities with strongly identified
common interests, it is a bit difficult to see
how drastically rising earnings inequality
could do anything but strain those normative
institutional ties.
At minimum, these trends indicate a con-
siderable shift in the material and social basis
for the production of common occupational
communities in the professions. This
common community is a key component of
promoting and maintaining dominant organ-
izing archetypes that stress autonomy,
equality, and a common set of ethics in the
delivery of professional services. Whatever
else professional occupations represent, they
are no longer elite occupations full of people
from homogeneous social and economic
backgrounds.
Demographic and material diversity is
compounded further by the growth of
specialty groups within most professional
occupations. The role of the general,
omnibus practitioner whose professional
status and prestige rested on their ability to
apply professional knowledge to a wide vari-
ety of conditions is yielding to increasingly
specialized practice settings, where clients
come to have specific and narrow sets of
needs addressed. The combination of demo-
graphic diversification, rising income
inequality, and extreme specialization have
led some researchers (e.g. Barbara Reskin) to
detect a growing gendered and racialized
division of professional labor as glamorous,
high-visibility specialties become the prerog-
ative of whites and men and less glamorous
generalist/public service specialties become
the domain of women and traditionally
underrepresented groups (see also Epstein
1993, 2004).
CHANGES IN THE RELATIVE SALIENCE
OF INSTITUTIONAL AND TECHNICAL
ENVIRONMENTS IN PROFESSIONAL
SERVICE DELIVERY
Cost and quality pressures from
clients
The costs of many professional services (for
example, medical care and college tuition)
have risen at several times the inflation rate
since the early 1980s. This increase in fees,
and the growing affluence of some of the
more visible segments of most professional
groups (e.g. partners in large urban law
firms, financial analysts for corporate banks,
and college presidents), has occurred at the
same time as median income and earnings (in
real dollar terms) have stagnated, leaving the
average middle-class consumer of profes-
sional services at the mercy of the market.
Health insurers, in particular, have been
unable to control the sharp increase in med-
ical costs as new and expensive technologies
come on-line that promise more effective
treatment for an ever wider variety of
diseases. Scientific instruments necessary to
establish a university research laboratory in
any of the physical or biological sciences
now routinely cost $500,000 to $1 million or
more and much of this equipment needs to be
replaced every few years, some of it for
safety reasons.
The rise in college tuition has been accom-
panied by the rising expenses associated with
professional and graduate education. In the
US, young professionals now leave univer-
sity-based training hundreds of thousands of
dollars in debt, and the need to pay off these
debts often distorts and/or limits the special-
izations and areas of professional practice
they choose to pursue.
Complicating this entire process further is
the institutionalized price signaling that
 INSTITUTIONALISM AND THE PROFESSIONS
occurs in the most professional practice set-
tings. In this environment, price is often a
proxy for quality and clients and others are at
a severe disadvantage when it comes to eval-
uating the quality of professional services
they receive. Since the lowest price isn’t
always the best or expected quality, and the
client has no way of evaluating the opportu-
nity costs of selecting different service
providers, those that set prices have relatively
free rein to charge what they will for profes-
sional services.
On top of this, there has been considerable
growth in inequalities among clients and
traditional purchasers of professional serv-
ices. Colleges and universities increasingly
rely on affluent parents with deep pockets to
subsidize financial aid programs for students
who can’t pay full tuition. Private founda-
tions and corporations increasingly partner
with science laboratories at universities
to lavishly fund research and support
researchers. Healthcare delivery increasingly
is geared toward clients with health insur-
ance plans who can afford to pay exorbitant
fees for new medical technologies, fees that
take into account the inability of most
patients to afford treatment. These plans (in
the US) are paid for by employers who see
their health insurance premiums rise at
double-digit percentage rates every year.
Law firms increasingly find their most afflu-
ent, corporate clients shopping around for the
cheapest (and most expedient) legal advice,
cutting off steady, long-term income streams
and placing a premium on ‘rainmaking’ (the
solicitation of high-priced legal work by
partners in law firms).
The salience of markets as
a key component of the
technical environment
The traditionally-defined professions have
always walked a tightrope between the insti-
tutional logic of professional practice cen-
tered on professional–client relationships,
autonomy, collegiality, and professional
437
ethics on the one hand, versus a technical
environment stressing market efficiency,
technological change, and organizational
innovation on the other (see Malhotra,
Morris and Hinings 2006). In the last
25 years, the rise of neo-liberal political and
economic ideologies has threatened the
expert claims of professional groups and the
logic of professional organization as an alter-
native to and protector of client and public
welfare. This historic change was triggered
by the crisis of Keynesian economics in the
mid-1970s and the implications this crisis
presented for a post-industrial future
dominated by technical and administrative
expertise (cf. Bell 1976). This change is
reflected in the Western European context by
the rise of new public management ideas in
professional civil service bureaucracies.
The contemporary situation of the profes-
sions can be contrasted with the early- to
mid-1960s predictions regarding the spread
of professional expertise and reliance on lib-
eral-technocratic professionals in the new
post-industrial developed world (see, for
example, Bell 1976; Frank et al. 1995; Frank
1997). In this world of the future, professions
and knowledge-based work roles develop in
response to the demands of post-industrial
capitalism. The process of filling these jobs
and the larger societal adjustments that come
with the demand for highly educated workers
(educational expansion, credentialing, longer
stretches of time in school, and mass higher
education) create a professional elite that
applies their specialized knowledge to an
ever-broader range of problems.
The growing ideology of the efficacy of
professional expertise dovetailed nicely with
1950s and 1960s conceptions of Keynesian
economics and the Great Society programs
of the Johnson administration. Through the
use of demand management and other techni-
cal macroeconomic tools, Keynesian
economics turned decisions about the appro-
priate levels of inflation, unemployment, and
poverty into technical decisions of
technocrats and professionals whose actions
would guide the US Federal Government
438 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
toward full employment, low inflation, and
prosperity for all (see Stein 1983).
This view of a post-industrial world where
knowledge experts would manage the econ-
omy in the name of full employment, low
inflation and general prosperity, was chal-
lenged by two developments: (1) the crisis in
Keynesian economics that resulted from the
stagflation and economic stagnation of the
1970s; and (2) the subsequent inability of
skill-based models to explain rising income
and earnings inequality among professionals
and between professionals and non-profes-
sional groups. These developments led to a
broad-based questioning of the relationship
between technological expertise and general
social welfare while also leading to serious
questioning of the ability and desirability of
attempting to manage the economy.
The sets of policy tools advocated by mon-
etarist, new classical and (eventually)
supply-side economics differed considerably
from those who advocated expert-based
Keynesian macroeconomics. These policies
included:
(1) Deregulation of heavily regulated industries;
(2) Promotion of greater economic competition by
lowering trade barriers;
(3) Repeal of special subsidies and tax loopholes for
specific industries;
(4) Across-the-board tax cuts especially targeted
toward taxes on corporations and higher mar-
ginal income tax rates.
(5) Cuts in government domestic spending in an
attempt to remove disincentives to work, invest,
and save.
Regardless of their distributional conse-
quences, the subsequent success of these
polices at restoring economic growth led to
the vindication and promotion of market-
based solutions to other vexing problems,
including the calls for accountability and
lower costs in the provision of professional
services.
The present challenge of neo-liberalism as
an economic and political ideology has pro-
found implications for the professions as
coherent occupational entities that control
task domains and exercise discretion over the
performance of complex tasks for the benefit
of clients and the larger society. Many of
these challenges are clarified if we take the
colloquialisms of the new neo-liberal
consensus and contrast those with traditional
conceptions of professional practice and the
concept of expert labor:
1. Consumers know best. Any attempt to interfere
with, regulate, or affect consumer choice costs
consumers money. This means that any interfer-
ence with service provision (such as licensing
procedures, legally defined monopolies over task
domains, competency tests, and other devices for
restricting professional service provision)
extracts costs that are rarely if ever justified.
Consumers of services eventually will reward
competent, scrupulous providers and punish
incompetent, unscrupulous ones. All that is nec-
essary is to let the market do its work with the
dollars of the consuming public voting for best
practices.
2. Markets will determine what is right. The market
becomes the locus of human perfection (see
Giddens 1994). No expert can make, guide or
direct choices in the ways that markets will. No
authority can make the wise choices that markets
can make. Let markets do their job and stay out
of it.
3. No credentialing or licensing. These are simply
attempts to collect monopoly rents. Consumers
will naturally be led to choices that are best for
them, and credentialing and licensing are just an
attempt to extract windfall profits at the expense
of consumers.
4. No codes of ethics. Markets will naturally reward
those who behave in the best interests of those
who purchase professional services. Information
about ethical and unethical practices can be
sorted out in the wash and those practitioners
who do what clients want them to do and who
act in their best interests will win out in the end.
5. Competition will lower fees and salaries. Service
delivery from a variety of professional groups, in
a variety of settings, with a wide range of organi-
zational arrangements, will keep fees and salaries
low and service delivery of the best quality.
In European contexts, the 1970s and 1980s
and the accompanying economic recessions
and deindustrialization led to a widespread
 INSTITUTIONALISM AND THE PROFESSIONS
questioning of the salience of European
models of capitalism (cf. Esping-Anderson
1989; Rifkin 2004; Ironside and Seifert
2003; Fourcade 2006). Because professional
practice (and especially the delivery of health
care and education) have much more exten-
sive ties to the public sector in most
European countries, the main response to this
general crisis in confidence (for professional
groups) was the rise of New Public
Management (NPM). While New Public
Management is a label applied to a diverse
set of reforms, ideas, and ideologies
(cf. Manning 2000; Savoie 1995), the general
thrust of NPM initiatives is to subject the
provision of public service by professionals
to market forces through disaggrega-
tion, competition, and incentivization
(see Dunleavy, Margetts Bastow and Tinkler
2005).
The specific manifestations of marketiza-
tion and New Public Management vary from
place to place and affect a wide array of pro-
fessional groups. Attempts to implement
New Public Management concepts in the UK
national health service, in particular, have
been controversial (see Ironside and Seifert
2003). As with the case of attempts to bring
market incentives to professional practice in
the United States, there are very few exam-
ples of the successful implementation of
New Public Management concepts in
European professional health services (see
especially Bottery 1996; Scott et al. 1997;
Dunleavey et al. 2005; Christiansen and
Laegreid 1999; Lynn 1998; Reschentheler
and Thompson 1996; Kaboolian 1998). The
criticisms of New Public Management in
these contexts revolve around the disarticula-
tion between public service and revenue
maximization, and the inability to ‘get prices
right’ in the provision of services and inter-
mediate goods that are government-
supported natural monopolies. These
changes in the economic side of the technical
environment for professionals have been
equaled or exceeded by changes in the
technologies used to deliver professional
services, as we discuss below.
439
PROFESSIONS AND THEIR INTERFACE
WITH TECHNOLOGY – THE NEW
TECHNOLOGICAL IMPERATIVE IN
HEALTH/MEDICAL CARE
During the 1980s and 1990s, when a number
of interesting statements and refinements of
institutional theory were appearing,
DiMaggio and Powell’s important paper
(1983) launched a number of studies, often
focused on classifying organizations by the
characteristics of their technical and institu-
tional environments. This work helped
remind the field of the importance of both
types of environmental pressures, as well as
leading various scholars to consider histori-
cal changes in organizations as well as in
their institutional and technical environ-
ments. Thus, early conceptualizations of
technical and institutional environments by
Scott and colleagues (1983, 1995, 2000) pro-
vided a matrix for classifying organizations
by the characteristics of their environments,
and by differentiating between powerful
constraints presented by one or the other
environmental type.
Scott’s empirical focus was often health-
care organizations, as this particular industry
provides a history of both well-developed
institutional and market pressures. It is also a
field in which the prominence of the medical
profession (as well as increasing attempts by
other professional groups within healthcare
to define their own arena of control) has
provided a most fertile field for examinations
of larger societal and institutional changes in
healthcare organizations and the profession-
als linked to healthcare delivery (Light 1991;
Hafferty & Light 1995; Leicht and Fennell
2001).
Scott’s conceptualization was followed by
the work of Alexander and D’Aunno (1990),
who tracked the transformation of the
institutional environment of health care
organizations from post WWII to the late
1980s. They suggested the norms of the
medical/health industry were changing in
important ways, so that the pressures of the
440 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
technical environments of healthcare organi-
zations in the 1990s (both the growing
costliness of the technological imperative in
health care, as well as increasing pressures to
control costs through the mechanisms of
manage care) were gaining in strength.
Concomitantly, the traditional institutional
norms surrounding the autonomy of medical
professionals and physician control over
decision-making were losing steam in the
face of managed care. More recently, Scott
and colleagues (2000) have examined in
detail the healthcare organizations, material-
resource environments, and institutional
environments in one large metropolitan
region of the US – the San Francisco Bay
Area, from 1945 to 1995. This study also
took pains to examine environmental
pressures as they transformed over this
period, and did so by considering three
environmental levels of analysis: local,
regional and national environments.
Most of the research on healthcare organi-
zations has focused primarily on the
providers of healthcare services (hospitals,
physicians, nursing homes, etc.), or the
payers for healthcare services (employers,
insurance companies, the federal govern-
ment). Sometimes, regulatory programs and
their designers have been examined
(Williamson 1985; Singh, Tucker and House
1986; Streeck and Schmitter 1985). Until
recently, however, there have been few analy-
ses of that portion of the industry that has
become increasingly more important to the
material/resource/technical environment: the
producers of new healthcare technology.
Burns has investigated supply chain relation-
ships in the healthcare industry (2005),
focusing on trading relationships between
healthcare providers and their upstream sup-
pliers. Most recently Burns has provided a
detailed overview of the pharmaceutical,
biotechnology, genomics-proteomics, med-
ical device, and information technology
sectors within the healthcare value chain
(2005), as well as the business models and
corporate strategies of firms within these
sectors. In doing so, Burns has tapped into
an extremely rich vein of organizational
relationships, new organizational forms, and
technological pressures affecting healthcare
professionals, university research laborato-
ries, for-profit R&D laboratoriess, and mar-
keting organizations. The intertwined
markets and institutional forces linking these
diverse actors are ripe for an institutional
theory analysis.
Burns’ overview of current technological
innovations in medical/healthcare treatment
provides at least three examples of how the
‘new technological imperative’ is driving
healthcare professionals and organizations
toward vastly different configurations in both
the healthcare value chain and eventually in
the patient treatment arena: (1) the prolifera-
tion of merger and acquisition (M&A) and
strategic alliance (SA) development across
multiple parts of the value chain, particularly
in the pharmaceuticals sector, and between
biotechnology and pharmaceutical compa-
nies; (2) changes in the methods used to
communicate with and persuade key stake-
holders and customers (particularly
physicians); and (3) the globalization
of manufacturing, marketing and distribution
of drugs.
Strategic alliances and mergers
The pharmaceuticals sector is a particularly
appropriate example of a growing sector
within health care where the characteris-
tics of new technologies and products have
led to an increase is interorganizational con-
nections. All five technology producers in
health care (pharmaceuticals, biotechnology,
genomics-proteomics, medical device, and
information technology) share several very
important characteristics: they are all
increasingly interdependent, research-inten-
sive, and technologically complex. They
differ, however, on a number of dimensions
related to time (development cycles, age of
firms, age of the sector, expected product
impact as short- or long-term), and
space (local vs. global dominance).
 INSTITUTIONALISM AND THE PROFESSIONS
Pharmaceuticals as a sector are particularly
held captive to very high-risk product devel-
opment models (two out of every hundred
new drug projects make it to market), and
very long time lines for the ‘bench to bed’
program (an average of twelve years;
Northrup 2005). Investment costs are high
for the intellectual capital part of this process
(discovery through scientific review)
and marketing, but quite low for ingredient
costs and processing charges. In fact, the
returns for successful products are then
priced to cover the costs of the many failed
projects.
Northrup (2005) describes the interplay
between traditional pharmaceutical firms
(the older actors in new drug/biologics/bio-
products innovation) and more recently
developed biotechnology firms (most created
since the completion of the Human Genome
Project). Pharmaceutical firms have histori-
cally focused on chemistry-based, small
molecule products (often referred to as new
chemical entities, NCEs), whereas biotech
firms typically focus at first on proteins, pep-
tides, or monoclonal antibodies, all of which
are bigger than most NCEs, and require some
route of administration into the body other
than taking a pill. Biotech firms tend to
evolve from university-based discoveries that
become licensed to a new (and often small)
biotech company, headed by the academic PI
(see Stuart and Ding 2006). Financing comes
from venture capitalists during the long drug
development stage, perhaps finally involving
an initial public offering (IPO) when the
biotech firm goes public. Many successful
new product cycles later, the small biotech
firm may reach the stage of a fully integrated
pharmaceutical company (FIPCO). More
likely, however, is the scenario in which the
biotech firm links with other specialty firms
to handle preclinical development/testing,
such as a contract research organization
(CRO), a contract manufacturing organiza-
tion (CMO) and a contract sales company to
handle marketing (CSO). Another route is for
all three later stages to be cycled through a
big pharmaceutical firm, after the development
441
of either an SA or a merger. From the view-
point of big pharma, connection to innovative
discoveries in biotech can be handled either
internally (make your own, or more cost-
effectively, buy your own biotech company),
or externally, through alliances with smaller
biotech companies. In either case, it is gener-
ally recognized in the pharmaceutical sector
that most firms cannot handle all aspects of
the product cycle, in both small and large
molecule development. Further, alliances are
also increasingly common between pharma
firms and genomics-proteomics companies
in order to manage licensing agreements and
intellectual property issues. Such alliances
are commonly based on either a specific
therapeutic area, or for data mining activities
(large-scale screening of libraries on a
specific gene sequence), or technology
transfer (Sammut, 2005).
Changes in communication with
market targets
The traditional method of communicating
with targeted markets for new pharmaceuti-
cals has always been the one-on-one selling
of the new product to physicians, either in
MD offices, over lunch, or at the conference
cocktail party/dinner. In their quest for more
effective and most cost-efficient methods of
marketing, pharmaceutical firms have been
innovating with the use of information tech-
nology. Although ‘detail reps’ are still a
commonly-used mechanism, firms such as
Lilly have been experimenting with the use
of a ‘sales productivity process’ (Northrup
2005), which employs more frequent elec-
tronic/phone/video communication with
physicians who have been pre-identified as
the right target for the new drug (right spe-
cialty, use of data on past prescribing behav-
ior, preferred communication channels, etc.).
E-detailing combines multiple channels of
communication with repeated contacts to get
information out on the new product, without
taking time from the physician’s busy office
schedule for the traditional one-on-one.
442 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
The use of patient-oriented sales of pre-
scription drugs through media advertisement
has increased in volume and advertising
sophistication. Advertisements stress the per-
sonal benefits to the individual patient with
cancer, acid reflux, insomnia, etc. with a
dreamy backdrop, colorful costumes, or
shots of happy middle-aged active
people, followed by rapid ‘fine print’
instructions to contact your physician and a
list of patient conditions which would
counter-indicate the appropriateness of the
new drug. These advertising strategies are no
doubt riding on the perception of increasing
numbers of well-educated, independent
consumers who will march into their doctor’s
offices with demands to ‘let me try this
new drug.’
Both of these changes in marketing strat-
egy, away from personal contact with physi-
cians, and toward the use of either new
IT-based marketing, data-based marketing
strategies, and consumer targeting, are
examples of how the role of the physician in
the new drug market has changed. The insti-
tutional environment of new healthcare
products has shifted toward more compli-
cated multi-organizational relationships, just
as the traditional autonomy and dominance
of the physician in the healthcare sector has
been replaced by a matrix of corporate
actors. The ‘new technological imperative’
is one in which biotech firms, big pharma-
ceutical firms, a range of contract service
firms, and advertising strategies have further
diminished the physician’s independent
decision-making. The comparison to the old
imperative of demands from physicians and
patients fueling the need for access to new
technologies is striking.
The globalization of drug
manufacturing and marketing
Although the biotechnology sector is far
more mature in the US than elsewhere, this
sector is definitely growing in both Europe
and Asia. Major increases in state-supported
efforts to build this industry have been seen
in Germany, Canada, China, Korea, Taiwan
and Singapore. In addition, large US pharma-
ceutical firms have expanded both their mar-
keting reach and their manufacturing
networks into South America, Asia, and
Central/Eastern Europe (Pfeffer 2005). Out-
sourcing globally, once regulatory issues are
managed, allow big firms to enjoy reduced
manufacturing costs and reduced marketing
costs; but the costs involved in startup of
infrastructure, regulatory and cultural
differences are usually beyond the means of
smaller firms. We have also seen recent
efforts to outsource biomedical R&D
globally by US firms, in order to avoid
some US regulatory constraints. Singapore
actively supports stem cell research,
unlike the US, where limits are placed on
usage of only approved, pre-existing
stem-cell families, and embryo research
is limited due to bioethical concerns (Pfeffer
2005).
There is another surprising and somewhat
troublesome side-effect of globalization and
the rising costs of employer-based health
insurance plans in the US. Some have noted
recently an increase in interest in the concept
of ‘medical tourism’ among smaller,
self-insured employers (Jonsson 2006).
Medical tourism (also known as ‘global
health care’) is the practice of sending
employees overseas to receive surgery and
post-surgical follow-up as part of their health
insurance coverage. Employees are encour-
aged to travel to India, Jarkarta or Bangkok
for serious surgical interventions, such as hip
replacements and heart stents. The costs for
overseas surgeries like these can be up to 80
percent less than the same procedure in the
US, and the overseas surgery includes resort-
style convalescence. This is another example
of how the technical environment (markets)
of health care has globalized, while the
traditional, formerly institutionalized,
concepts of US health care as unmatched,
and US doctors as a key partner in the
patient–provider relationship, have receded
dramatically.
 INSTITUTIONALISM AND THE PROFESSIONS
RECENTLY-PUBLICIZED SCANDALS
AND FURTHER INSTITUTIONAL
CRISES OF ACCOUNTABILITY
Some of the antecedents and consequences
of the changing institutional environment for
professional groups are well-publicized
scandals in the delivery of professional serv-
ices. Many of these most recent scandals
involve business services like accounting,
law, and finance (Enron; MCIWORLDCOM;
Royal Ahold) but there are also scandals
involving medicine and healthcare
(the Harold Shipman scandal in the UK;
the organ transplantation crisis in the
University of California hospital system).
Each of these scandals points to the promises
and perils of deregulation, market incentives,
and technological change in professional
practice.
Harold Shipman, Kaiser
Permanente, the University
of California-Irvine and crises
of medical confidence
Between 1976 and 1998, Harold Shipman
(a general practitioner in the UK Health
Service) murdered at least 236 people all
over central England. Most of Shipman’s vic-
tims were elderly women, and almost all of
the victims were murdered through drug
overdoses (mostly morphine). Shipman was
convicted of 15 of the murders on
January 31, 2000 and sentenced to 15 life
terms. He committed suicide in prison in
January, 2004.
The public inquiry that followed the reve-
lations of Shipman’s behavior, the extent of
his crimes, and the inability of the UK health
service system to detect and respond to the
problems in its midst have led to a wide-
spread overhaul of the checks and balances
in the UK healthcare system. Postmortems
are now required in all patient deaths, and
deceased patients cannot be cremated until a
proper and independent postmortem has
been conducted.
443
But the case raised other disturbing ques-
tions about the role of professional autonomy
and the inability (or unwillingness) of other
professionals to police Shipman’s activities.
The cumulative record of suspicious deaths
was never scrutinized (even though UK
medical record collection is centralized
through the health service). Suspicious col-
leagues were placated by Shipman’s assur-
ances that he knew what he was doing and
that no scrutiny of the deaths of his patients
was necessary. His colleagues assumed
Shipman was being honest and open with
them when he was being anything but. The
healthcare system did not require post-
mortem investigation of patient deaths in a
situation where simple blood tests would
have revealed massive drug overdoses. And
Shipman moved to no fewer than four
locations when outside constituents became
suspicious, but he had no trouble securing
another job and continuing his bizarre and
grizzly practices. This case reflects a gross
failure of oversight in a traditional, state-
supported professional setting that has
changed the nature of medical practice in the
UK and in continental Europe as well (cf.
Weaver 2006).
The organ transplantation scandal that
broke in California in May–August, 2006
(involving Kaiser Permanente and the UC-
Irvine hospitals) is another example of the
problems new organizational forms present
when they are confronted with new technolo-
gies. In mid-2004, Kaiser sent a letter to all
would-be kidney transplant patients and told
them that they would no longer pay for
kidney transplants at outside hospitals.
Instead, patients would have to come to a
new transplant facility in San Francisco
where doctors affiliated with Kaiser would
perform the transplant.
What happened after this is a matter of dis-
pute. Kaiser went from having no transplant
program to having the longest transplant
waiting list in the nation. In the process, their
patients drastically lowered their chances of
receiving new kidneys, many patients died
waiting for organs, and Kaiser failed to fill
444 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
out the necessary paperwork to obtain organs
for their patients. According to the Los
Angeles Times, in 2005 Kaiser performed
only 54 kidney transplants and at least 108
patients died waiting for organs. The national
statistics for other transplant programs are
usually the opposite of this – twice as many
transplants in proportion to the number of
patients who die waiting for organs.
National transplant regulators paid no
attention to these troubling trends even
though the data were available on the inter-
net. The case was broken when the Los
Angeles Times began an investigative report
on transplant programs in California and
uncovered the discrepancies (Los Angeles
Times 2006). Kaiser closed their transplant
program in May 2006.
California assemblymen recently called
for more oversight and regulation of trans-
plant programs in light of the Kaiser
Permanente scandal and a related scandal in
the University of California-Irvine Hospital
system. UCI closed its liver program in
November 2005 after the Los Angeles Times
reported that 32 people had died awaiting
transplants in 2004 and 2005 while the UC-
Irvine hospital had turned down scores of
donated organs. Unbeknownst to patients,
UCI had not had a full-time liver transplant
surgeon for more than a year when it closed
the program. St. Vincent Hospital in Los
Angeles also halted its liver transplant pro-
gram in September 2005 after acknowledg-
ing that its doctors had violated national
transplant standards in 2003. Surgeons
transplanted a donated liver into a patient
who ranked 52nd on the regional waiting list,
bypassing dozens of people whose condi-
tions were considered more dire. Staff mem-
bers subsequently falsified documents to
cover up the action. Both of these actions
have prompted California assemblymen to
call for new transplant oversight in California
and renewed ability for the state to fine
hospitals up to $100,000 for failure to meet
basic national healthcare standards.
In both the Shipman case and the hospital
transplant cases, there were systemic
violations of professional ethics that were not
detected by the traditional system of institu-
tional oversight. But the response to these
problems has been a call not for more
market-based accountability but for
more regulation of professional activity in
the name of traditional institutional norms
involving patient interests and welfare.
This, and the business, financing and
accounting scandals we discuss below, seems
to suggest that there are bumps on the road to
the use of market mechanisms and technical
environments to bring discipline to
professional practice.
Enron, MCI-WORLDCOM and
Roya Ahold: bumps on the
road to professional onmnibus
business services
The accounting and financing scandals that
rocked the American business community in
2005 and 2006 (and the European business
community through Royal Ahold, a Dutch
food market supplier) point to many of the
institutional and technical problems with
deregulated financing systems and deregu-
lated financial markets. For our purposes,
these cases also expose some of the more
fundamental problems with the interface
between management consulting, account-
ing, and law that will likely prevent the con-
solidation of these professional groups into
new organizational forms.
In each of these cases (and the case of
Tyco International), the problems were
highly similar, as were the abuses. Top exec-
utives of each company were paid through
stock options. These options were supposed
to tie the compensation of top officials to the
financial performance of the company, but
instead they provided a built-in incentive to
report ever-rising profits to Wall Street
and the larger financial community so
that stock prices would rise. None of this
would be problematic if the profes-
sional groups (lawyers and accountants)
exercised their professional prerogatives to
 INSTITUTIONALISM AND THE PROFESSIONS
independently monitor the legal and
financial behavior of the firms involved.
But, in each case, there were significant
conflicts of interest that prevented this from
happening.
The Enron case is a typical example.
Enron purchased consulting and accounting
services from Arthur Anderson, at the time
one of the ‘Big Five’ accounting
firms. Enron also retained external legal
counsel that assumed that Arthur Andersen
was doing its job of monitoring the finan-
cial transactions of the company so that the
certified profits of the company were
legitimate. Both Arthur Anderson and
Enron’s legal firm received millions of
dollars in fees, fees that rose with Enron’s
reported profits.
When these cases began to unravel, each
revealed a tangled web of financial transac-
tions that (a) systematically misrepresented
the financial health of the firm, misrepresen-
tations that were certified by accounting
firms with substantial financial interests in
the consulting income they were deriving
from the firms they were auditing, (b) law
firms that were more than content to look the
other way as long as legal fees were regularly
paid and audits were certified as legitimate,
and (c) CEOs and top managers who made
millions from falsified corporate profits and
backdated stock options (see Froud et al.
2004 for an analysis of Enron as both an
example of corporate failure through
‘financialization,’ and as a firm embedded
within a political web of special interests and
powerful actors).
All of these situations have led to funda-
mental questioning of Generally Accepted
Practices in accounting and the ability of
accountants and lawyers to remain
independent from their clients. They have
also struck a (for now) fatal blow to
the concept of clusters of accounting,
legal, and management consulting
services (omnibus business services firms)
given the likelihood of fundamental con-
flicts of interest in a deregulated financial
environment.
445
CONCLUSIONS AND IMPLICATIONS
The study of professions and professional
work is intimately tied to institutionalism and
institutional theory, as our chapter illustrates.
The questions we raised have direct implica-
tions for future research programs on institu-
tional theory and professional work.
One of the more interesting implications
of the new institutional environment for pro-
fessional practice is the virtual disappearance
of individual clients from our discussion
here. Traditional professional practice norms
focused on forging links between profession-
als and clients. But the newly developing net-
worked linkages we discuss seem to leave
individual clients behind in the name of pur-
suing profit and efficiency. Researchers will
want to study new organizational alliances,
forms and marketing strategies for the provi-
sion of healthcare, both in the United
States and elsewhere, documenting the
evolution and growth of new institutionalized
norms and practices. The interface between
pharmaceutical companies, physicians, hos-
pitals, biotechnology terms, advertisers, and
governments, is spreading in a distinctively
North American environment where
deregulation of health care (even in light of
the transplantation scandals in California)
seems to be on an upswing. Researchers
interested in the interface between
professional work and institutional theory
should also examine more closely the
increased ability of insurers, big clients, and
others to purchase professional services in a
global outsourced labor market where price
competition will become increasingly
salient. The growing embeddedness of these
networked connections between large institu-
tional and corporate actors, to the exclusion
of the best interests of individual clients and
consumers of professional services, suggests
that not all forms of embeddedness are
desirable.
Another area of research will be the
development of new collaborative alliances
between management consultants and
economists as would-be professional groups,
446 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and the interface between consultants,
accounting, and legal practice as business
services (see Gross and Keiser 2006).
Management consultants and economists are
competing over the task domain to reorgan-
ize professional practice in the name of effi-
ciency and cost effectiveness. Since
management and economic consulting is the
least regulated of these occupational groups,
students of the professions will need to
examine the evolving institutional and tech-
nical environment that consultants, account-
ants, and lawyers face in the wake of the
well-publicized scandals discussed here
(see also Fourcade 2006).
These research problems, among others,
suggest that the interface between the profes-
sions and institutional theory will continue to
attract substantial interest. The ability of
institutional theory to provide insight into
both the dark ethical scandals of the early
21st century and the growing embeddedness
of well-networked corporate actors at the
expense of clients attests to the flexibility
and strength of research on the professions
framed by institutional theory.
NOTE
1 Data are from the Current Population Survey,
1970–2004, US Bureau of the Census, and reflect
changes among physicians, lawyers, accountants,
natural scientists, social scientists, and professors of
natural and social science.
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Institutionalism and
Globalization Studies
Predating any discussions of globalization,
institutional presuppositions regarding
embeddedness and diffusion were applied on
the world level in what was then called
comparative studies. As early as the 1970s,
when comparative studies were caught in an
impasse between dependency and modern-
ization theories, a group of Stanford
University scholars challenged the prevailing
realist comparative traditions and made
initial empirical studies that set the founda-
tion for almost four decades of prolific insti-
tutional and comparative research. Today, in
the era of hyperglobalization and countless
commentaries on globalization, institu-
tional theory of globalization – commonly
referred to as world society theory – has
carved a substantial niche in globalization
studies.
The main theme of the institutionalist
tradition in globalization studies is that the
world is the environment and that nation-
states, as well as multinational corporations
and international organizations, are the
organizations embedded in it. The related
themes – of interconnectedness, universal-
ism, and embedding – invoke Donne's
imagery: with the phrase ‘no nation-state is
an island’ (Meyer, Boli, Thomas and
Ramirez, 1997): nation-states are embedded
in world society, rather than disconnected
18
Gili S. Drori
from their global context, and thus political
units, once defined as nation-states, they are
subject to the global cultural process, such as
the discourses of developmentalism or actor-
hood. Derived from this logic are several
other institutional emphases, for example on
the diffuse state of authority of the global
system, on the role of institutional mecha-
nisms in the cross-national diffusion of
ideas and practices, and on the rationalizing
and standardizing impact of international
organizations, the professions, and the uni-
versalized models they carry. These issues
serve as the axes for world society theory’s
voluminous research tradition, offering
abstract yet richly empirical work.
From its initial steps (Meyer, Boli-Bennet
and Chase-Dunn, 1975; Meyer and Hannan,
1979) through its mature statements (Meyer,
Boli and Thomas, 1987; Meyer et al., 1997;
Boli and Thomas, 1997), world society
theory formulated a new and institutionalist
globalization theory while also adding to the
richness of institutional thinking. In discus-
sions of globalization, world society theory
challenged the then-reigning perspectives in
comparative sociology – dependency and
modernization theories – by adding institu-
tionalist and cultural tones to the highly
instrumentalist discourse of the times and
highlighting the constitution of the global as
450 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
an additional ‘level’ to the international and
transnational. In its way, it also disputed
the common vision of nation-states as
autonomous and calculating rational actors
by drawing attention to the consolidating
supralevel of globalization and to the
diffusion of ideas and practices from this
common core. To institutional thinking,
world society theory added macro-level
discussions situating even nation-states
within a broader environment, elaborated the
phenome-nological tradition within institu-
tional thinking, and enhanced the empirical
grounding of institutional work with highly
quantitative research.
The goals of this chapter are to describe
the tenets of world society theory and to
place these institutional insights in the con-
text of current debates about globalization,
its definition, and its trajectory. Following a
review of the emergence of globalization
studies and the breakthrough of world soci-
ety theory in this field, I lay out the tenets
of this theory, define its central concepts,
and describe its empirical corpus. This
review – empirical and conceptual –
emphasizes world society theory in particu-
lar, while situating this tradition within the
context of other comparative institutional
work and of other globalization studies in
the broad field of International Relations.
To clarify this distinction, two terms are
used to refer to the institutionalist compar-
ative traditions: world society theory
refers to the post-1980s studies, mostly
by John W. Meyer and his colleagues
who mark the phenomenological side of
institutional thinking, while the term com-
parative institutionalism refers to pre-
1980s studies by this Stanford University
group (before the self-recognition of this
work as a theoretical tradition) and to the
studies by other institutionalists whose
comparative work highlights operations
and networks more than the role of culture.
To conclude I open a discussion of the
trajectory of this line of thought and
research work.
DEBATING GLOBALIZATION
Globalization is a new concept for social
research: the term globalization has flour-
ished as a social science phrase only since
the mid-1990s (Guillén, 2001), in spite of the
long history of comparative work in sociol-
ogy and the other social sciences. Yet it is the
theoretical roots in such prior comparative
studies that are shaping the current scholarly
debates regarding globalization. And so the
worldviews of dependency and moderniza-
tion theorists, who fiercely debated the
nature of world affairs and international
processes during most of the twentieth
century, are now ‘reawakened’ into global-
ization debates between world system and
neoliberal theoreticians, respectively. In this
section I describe the debates between these
two theories of globalization and argue that
in spite of their fierce debate they share basic
assumptions and that it is these assumptions
that have been later challenged so effectively
by institutional theory.
These two theoretical traditions differ on
almost every idea (Table 18.1). First, they
differ in their perception of the global
system. Looking at the trends of global
expansion, neoliberal theorists see a
global system of production and trade. They
see overall development for the better, even if
advancement is not yet for all, and they con-
sider ‘growth through integration’ to be both
a development strategy and a description of
globalization to date. World system theorists,
on the other hand, see a global capitalist
system, with expanding inequalities between
classes of nations and regions. Second, while
both these realist theories define globaliza-
tion as a period of global capitalist expan-
sion, they diverge in their assessments of the
nature of capitalism and the trajectory of its
expansion. Whereas modernization theorists
view global capitalist expansion as progress
based on criteria of efficiency, achievement,
and justice, world system theorists view
global capitalist expansion as a compulsion of
profit-seeking forces that results in expanding
 INSTITUTIONALISM AND GLOBALIZATION STUDIES
Table 18.1 Defining globalization: comparing theoretical issues
Realist perspectives
Modernization
Nature of the global system Web of interdependencies
Nature of international Exchange sponsorship
relationships
Nature of social actors, Aggregate of individuals
such as states and INGOs Rational actors
Research questions International coordination
efforts
Processes and terms of
negotiated order
divides between rich nations and peoples and
poor nations and people. Third, they differ in
their understanding of the motivation and
interest that are driving the global system.
Whereas modernization theorists view glob-
alization as powered by rational, cost-benefit
calculation of the parties involved, founded
in the natural human desire for bettering
living conditions, world system theorists
view it as a process of marginalization of the
world’s underclass through the global divi-
sion of labor, production, and consumption.
Last, they differ in their definition of the
actors involved in the global system.
Whereas modernization theorists see a
system of transaction relations among
competing yet cooperating nation-states and
international organizations, world system
theorists see a system of exploitative and
manipulative dominance by elites (in both
the global core and the periphery) and multi-
national corporations. And although it may
seem as if the two theoretical camps delin-
eate the ‘pro and con’ stands on globaliza-
tion, there are surely many critics of
globalization from both theoretical stands –
most pointedly Joseph Stiglitz (2003) and
Saskia Sassen (1998), who, among others,
chose Globalization and its Discontents as
the witty title of their respective books.
451
Institutional
World system perspective
Global capitalist system World society
Exploitation Embededdness
Domination Networks
Manipulation
Subunit of the global capitalist Highly relevant players,
structural system yet they are constituted,
Rational yet often passive scripted, or modeled
component units
International manipulation tools Density of the world
Concealed interests and power society, hence
differentials behind trade structuration
packs and international Nature of world society
arrangements themes, or models
Capitalist histories Nature of global diffusion
Nature of
institutionalized units
In these divergent views, today’s neoliber-
als and world system theorists, although
commenting on the recent idea of globali-
zation, continue on old theoretical paths in
comparative studies. And so today’s neolib-
eral writers such as Wolf (2004) and
Diamond (1993) continue on the path set by
the writings of Inkeles (1969), Rostow
(1971), Huntington (1968), and Parsons
(1964). On the side of critical thought,
Sassen (1998), Chase-Dunn (1998), Sklair
(2002), and Mittelman (1996) continue on
the path set in the writings of Frank (1969),
Cardoso (1972), Wallerstein (1979, 2000)
and draw from the yet older roots of Lenin’s
work on imperialism, which itself builds on
Marx’s and Engels’s work on capitalism.
By the 1970s, these two theories reached a
theoretical impasse: although the neoliberal
modernization theory and the Marxist world
system theory shared a structural and global
perspective on social processes, the debates
between them were stagnating. They repeat-
edly bickered over the nature of global
processes (progress or accumulation), the
motivation for global change (benevolent
or malicious), and the projections for
future prospects (closing gaps versus
widening divides). The main concept for
both these traditions was and still is a realist
452 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
perspective: in their understanding of the
world system, they highlight a mechanistic
image of the relations among global players
and assume that the players are rational and
bounded social actors. And any failure of this
global mechanistic system – such as war,
economic depression, or trade dependence –
was explained in terms of its function. Armed
with contradictory empirical findings, the
debates reached no resolution or even a
common ground for conversation since the
presuppositions were so very different. The
root of the empirical and theoretical impasse
was that both theories are functionalist and
thus share an ontological belief in the ration-
ality of the system. As a result, the contention
between modernization and world system
theories centered on the questions ‘Whose
rationality?’ and ‘Who does this rationality
serve?’ rather than questions about the
rationality of actors.
ENTER NEOINSTITUTIONALISM
On issues common to comparative studies –
from war (Hironaka, 2005) to the role of the
state (Meyer, 2000) to economic develop-
ment (Schofer, Ramirez, and Meyer, 2000) –
the point of departure of institutional thought
is on the dual matters of culture and rational-
ization. First, institutionalists highlighted the
failure of realist theories to recognize the
power of culture and norms in motivating
social change. As late as 1987, Thomas,
Meyer, Ramirez and Boli (1987: 7) were still
lamenting the view of culture as the residual
factor in international processes and advocat-
ing the reclaiming of culture by macrosociol-
ogy. For institutionalists, ‘culture involves
far more than general values and knowledge
that influence tastes and decisions; it defines
the ontological value of actors and action’
(Meyer et al., 1987: 22; emphasis in original
text). Second, rationalization, which is
defined as ‘the structuring of everyday life
within standardized impersonal rules that
constitute social organization as a means to
collective purpose’ (Meyer et al., 1987: 24),
is fundamental to describing the influence of
culture on behavior and structure. This insti-
tutionalist emphasis on rationalization
turns the discourse of rationality on its
head: it regards action and its formal justifi-
cations (in policy and other statements),
which are often taken by realists to be
prima facie evidence of deliberated and
rationally calculated intention, as scripts of
purposive and instrumentalized intention that
carry symbolic, ritualized, and ceremonial
importance.
In this way, the institutionalist (later, the
world society theory) critique of the various
realist comparative perspectives (later,
globalization studies) is direct. And on all its
points of critique and departure, compara-
tive institutional work invokes widely
accepted institutional principles. First,
emerging from institutional insights about
the constituted nature of collective units,
comparative institutionalists challenged the
realist view of the units of the international
system (such as nation-states) as bounded
and rational and that societies are aggregates
of individual interests, capacities, and
actions. This realist view, they claim, over-
looks the prescribed nature of such collective
‘actors’ that is influenced by the available
and legitimate models offered in and by its
global environment. It also ignores the
porous boundaries of each such unit.
Looking at these limitations of the realist
view, institutionalists understand actors to be
constituted, even if reified, entities and study
actorhood and agency as a Western cultural
model (for example, Frank and Meyer,
2002).
Second, drawing on the notion of institu-
tional isomorphism (DiMaggio and Powell,
1983; Zucker, 1987), institutionalists
challenge the realist expectation that intrinsic
needs and unique histories result in distinc-
tive trajectories and features. Rather, they
demonstrate that nation-states worldwide
share many dominant features – from the
form of governmental structures and the
definition of citizenship to the content of
 INSTITUTIONALISM AND GLOBALIZATION STUDIES
schoolbooks or legal documents – and argue
that the source of such similarity and con-
vergence toward it is the enveloping world
society (for example, Jang, 2000). ‘Common
definitions and theories of social organiza-
tion generate structural similarities in highly
disparate societies’ (Meyer et al., 1987: 19).
Here, no "island" or "islanders" (to repeat the
Donne metaphor) are spared the isomorphic
global pressures that also infuse the local and
problematize its authenticity.
Third, based on institutional understand-
ings of loose coupling (Weick, 1976; March
and Olsen, 1976), they challenge functional-
ists to explain the recurring disconnection
between policy and action (for example,
Drori, Meyer, Ramirez and Schofer, 2003),
which are otherwise explained by functional-
ists as failures. And fourth, whereas function-
alists explain such failures as problems of
effective coordination of social relations (due
to either incompetence or capitalist manipu-
lation), institutionalists draw on the notion of
ceremonial and ritualized conformity (Meyer
and Rowan, 1977) to demonstrate the power
of legitimacy and other symbolic resources
(for example, Drori and Meyer, 2006).
Overall, insti-tutionalists challenged the
common realist assumptions – whether func-
tionalist and liberal or critical and neo-
Marxist – on their definition of the social
actor, expectation of diversity and diver-
gence, expectation of competence, and confi-
dence in the power of material rewards. They
also added a constructivist dimension to the
study of the international system and later the
study of globalization.
This critique of realist approaches by com-
parative institutionalism matured over time,
drawing on elaborations in institutional
theory and on the consolidation of globaliza-
tion as a formal field of study. I later discuss
some points of connection between compar-
ative institutionalists in various academic
disciplines that have grown during this
process of coevolution. On the face of it, the
institutional point about the embeddedness
of units in their wider environment – what is
often called the open system model – was
453
something of a moot issue in international
and comparative studies: all theoretical
perspectives addressed the international
system and considered societies and states
within the context of that wider environment.
Yet world society theory pushed this point
further by analyzing the global itself: the
global was not only the context for the prac-
tices of nation-states and other organizations,
but it was also an analytic unit in itself. In
this way, world society scholars came to
redefine globalization.
REDEFINING GLOBALIZATION
In comparative institutional terms, globaliza-
tion is a dual process: global institutionali-
zation of world society and diffusion of
world societal models to social units embed-
ded in the global environment (Drori et al.,
2003; Drori, Meyer and Hwang, 2006).
Globalization is therefore ‘not only adapta-
tion and change of national institutions [to
global conditions and pressures]. It is also
about institution building in the transnational
arena – a space traditionally and typically
pictured and described as anomic and
adversarial’ (Djelic and Quack, 2003: 3).
Figures 18.1 and 18.2 describe these two
complementary dimensions of globalization.
Figure 18.1 shows the diffusion of practices
and themes to embedded units, most obvi-
ously nation-states, and Figure 18.2 shows
the consolidation of global fields (in ways
that go beyond aggregation of trends in sub-
units), thus highlighting globally shared
practices and beliefs. Together, the two fig-
ures show that similar issues – such as envi-
ronmentalism, health, or rights – are
institutionalized cross-nationally (as national
ministries) and globally (as international
organizations). Similar tales of this duality of
globalization are empirically exemplified by
others: for example, universalized myths
of the social role of science as a mechanism
of development and a progressive force
have become anchored in a global web of
international science organizations since the
454 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM

1.2
1
0.8
0.6
0.4
0.2
0
1870
1876
1882
1888
1894
1900
1906
1912
1918
1924
1930
1936
1942
1948
1954
1960
1966
1972
1978
1984
1990
1996
2002
Children Health Welfare Women Environment Science

Figure 18.1 Globalization as cross-national diffusion

Ratio of viable states that established a ministry, by field, 1870–2003

nineteenth century, while particular science- diffusion of models to various states and
related activities, from policy making to the organizations worldwide.
regulation of intellectual property rights, are The definition of globalization as a cross-
diffused cross-nationally as a result of these national diffusion process, often referred to
expectations and of the power of these inter- as internationalization, is now common,
national organizations to promote them even among realist researchers. The contri-
(Drori et al., 2003). In this way, globalization bution of world society theory is in the addi-
is a co-constitutive dual process: there are tion of the global level, highlighting the
reinforcing relations between the cross- consolidation of an overarching (universal or
national and the global. On one part, legiti- global) system that extends in meaning and
macy for global themes is bolstered when a form beyond the international sphere. This
practice comes to be institutionalized cross- emerging global system layers the transna-
nationally, while on the other part the global tional (effacing national boundaries) and
field serving as an important source for the global (considerably universal) in the

300

250

200

150

100

50

0
1850

1859

1868

1877

1886

1895

1904

1913

1922

1931

1940

1949

1958

1967

1976

1985

1994

Science Development Human Rights Governance Health

Figure 18.2 Globalization as the constitution of the global

Number of international organizations, by field, 1850–2000
Notee: The numbers of international organizations in development and human rights were divided by 10
to fit the scale of this graph.
 INSTITUTIONALISM AND GLOBALIZATION STUDIES
obvious international flows or exchanges of
everything from capital and labor to
commodities and diplomatic relations. In
addition, now that more attention is given to
the global or supranational sphere, again
even by realists (for example, Slaughter,
2004), the contribution of world society
theory is in reorienting the discussion toward
the rationalized, ritualized, and systemic
nature of action and behavior in the emerging
social arena. This definition of globalization
as a dual process is therefore a clear depar-
ture from realist definitions of globalization:
globalization is more than worldwide and
intensifying transactions and interdependen-
cies (for example, Keohane and Nye, 2000;
Foreign Policy, 2005, 2006); rather, global-
ization includes an additional conceptual
shift toward the universal and is thus a cul-
tural process in addition to being an eco-
nomic and political process. In this way, the
era of globalization reflects not only a
remarkable intensification of global
exchanges and flows and a dramatic thicken-
ing of international and transnational webs of
relations, but also a change in the organizing
logic from the particularistic (national,
ethnic) to the universal (human, standard-
ized, formal). This special consideration
given to the global is more than a method-
ological point about a higher level of analy-
sis. Drawing on the idea coined by Peter
Berger (1968), the consolidating global
dimension of globalization acts as a ‘sacred
canopy,’ or a commonly accepted world cul-
ture (Drori, 2005; Boli, 2001, 2006).
Globalization is highly dynamic. It dialec-
tically contains both institutional change and
institution building: a process of ‘building
and stabilization’ (Djelic and Quack,
2003: 6), a world of rules and order infused
with reinvention and reordering (Djelic and
Sahlin-Andersson, 2006: 375–376), or a spi-
raling process of institutionalization and
globalization (Drori et al., 2003). In this way,
it reconciles in the same complex and expan-
sive process both seemingly contradictory
institutional notions of embeddedness and
constant change (or reinvention). Such world
change is ‘incremental and consequential’
455
(Djelic and Quack, 2003: 7), stalactite-like,
with rare episodes of dramatic shift, balancing
between the lingering effects of civilizational
inertia, on the one hand, and the pressures
of an ever-changing physical and social
world.
On all these dimensions – main sphere of
globalization, central players in globalization,
and timing of globalization – world society
theory’s perspective on globalization is a
dramatic break from realist theories (see
Table 18.1). Looking at globalization, they
see a world society with an organizational
‘backbone’ (polity), in which states, organiza-
tions, and social groups are embedded, even if
in various degrees. The pivotal axis of global-
ization is cultural, and it has dramatic impact
on global change over and above economic
and political effects. In the absence of an
authoritative global state or another central-
ized arrangement (Meyer, 2000: 230), the
system hangs together through associational
relations and diffuse authority. The main
players are nation-states, international organ-
izations (of various sorts), and the professions
(and the rationalized models they carry).
Change is driven by world society and by the
empowered ‘local’: world society offers
models (scripts or prescriptions) that serve as
referents to embedded units; heavily infused
with the principles of progress and justice,
enactment of such models results in extensive
isomorphism throughout the world system.
With this approach to globalization, world
society theory offers an alternative image of
global social change. The realist perspective
describes social or policy change as driven
by the mobilization of grassroots social
groups, energized by particular grievances or
needs and by the availability of resources
(Figure 18.3A; also see, Meyer et al., 1997:
150–151, for other graphic displays of these
competing models). Local social groups then
pressure the relevant decision-making organ-
izations (state, international nongovernmen-
tal organization, or possibly a multinational
corporation), which codifies the demanded
change in rules and later enforces compli-
ance to the new rules. Change is therefore
linear: change is an outcome of pressures
456 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM

from demands for efficiency and progress or
for capitalist accumulation, and turning
points in the linear process reflect change in
the human technologies. This causal chain
operates locally (Putnam, 2001) and interna-
tionally (Keck and Sikkink, 1998).
On the other hand, institutionalists
describe both social change and local need as
prescribed by world society (Figure 18.3B).
World society constructs and empowers local
activity, frequently in decoupled form. As a
result, the state is being ‘squeezed’ by both a
global society and a highly constructed but
nevertheless active local society (see, Meyer,
1999). Any connection between need or con-
ditions, on the one hand, and action or policy,
on the other hand, is epiphenomenal and thus
loosely coupled: not only are needs and
conditions socially constructed according to
legitimate models or scripts, but the scripts
also assign rationality and agency to the var-
ious actors. The outcome of global pressures
toward rationalization and agency is a com-
plex, loosely arranged, decentralized, and yet
highly active world society.
WORLD SOCIETY: BETWEEN POLITY
AND CULTURE
Rise of the global
Borrowing the notion of an ‘imagined com-
munity’ from Anderson’s (1991) work on
nationalism, institutionalists highlight the
consolidation of a global imagined commu-
nity. Along with the recognition of a global
economy, an international political system, a
global ecology, and world health dependen-
cies comes an awareness of a global society.
This awareness of the global is evident in the
increasing availability of world-level infor-
mation: Hwang (2006) demonstrates that
information about the category of the
‘world’ (rather than ‘nation’ or ‘region’) is
increasingly available about many social
issues across the board, with only a few
exceptions regarding information that is still
considered highly parochial and under com-
petition (namely, military might, employ-
ment, and politics). ‘The emergence of
world-level data indicates the construction of

A. Realist perspective

Conditions: System features: Organization, for

- Resources - Complexity coordination:
- Exchange - Competition - Globally
- Actors - Cross-nationally

B. Institutional perspective

Rationalization

Organization, as
Global rationalization,
imagined formalization and
community expression of agency
- Globally
- Cross-Nationally

Actorhood

Figure 18.3 Images of global organization trends: comparing realist and institutional perspective
 INSTITUTIONALISM AND GLOBALIZATION STUDIES
problems and issues at the global level’
(Hwang, 2006: 82). This statistical aggrega-
tion to the world level, which also helps to
clarify global social problems (Ritzer,
2004a), expresses a vision of the world as the
relevant social unit.
The economy is the social category that is
the ‘big winner’ in terms of aggregation to
the global level. Indeed, the world economy
is the first issue on everyone’s mind when
considering globalization, and most informa-
tion compiled at the global level concerns
global trade, production, and finances.
Nevertheless, in this consolidating world
society, many other social issues are now
considered global features. Among them, the
dominant issues are those where systemic
interdependence, now worldwide, can be
argued; ecology, health, and human rights are
among the dominant issues, acquiring greater
legitimacy as global and transnational social
problems. Even beyond these ecosystemic
spheres, issues from social responsibility to
citizenship that were once confined to the
boundary of the nation or the state are now
extended worldwide and enjoy heightened
attention in policy making and social action.
The common thread of these themes is their
universal appeal: their description is
composed of the language of interdepend-
ency and universality.
The drama of this reorientation toward the
world as the social horizon is highlighted in
reviews of this continuous historical change,
at least since the nineteenth century (for
example, Frank, Hironaka, Meyer, Schofer
and Tuma, 1999; Schofer and Meyer, 2005;
Inoue and Drori, 2006). Although the history
of modernity and of the world is intertwined
with the history of the nation-state and
although nationalism has dominated ideolo-
gies since the middle of the nineteenth cen-
tury, the nation-state itself is an institutional
form and nation-statehood is an organizing
myth of the current world polity (Meyer,
1999). At the turn of the twenty-first century,
the vision of porous boundaries and network
connections is now applied to the nation-
state, replacing the vision of the world as an
457
international system with an image of the
world as both a transnational and a global
sphere. This universalized vision of society
has had an important impact on world organ-
ization and has reshaped world cultural
tenets: the current world polity is a reflection
of world cultural trends as much as it is a
codification of such norms into formal struc-
tures of action and policy making.
World polity
This self-conscious and explicit awareness of
the world as the social horizon has worked to
energize international and global organizing.
Today’s world polity, defined as the
backbone of globalization (Drori et al., 2003:
44), has four main features: it is (a)
expansive, (b) heterogeneous, in both organi-
zational forms and substantive issues,
(c) dynamic, and (d) loosely organized and
highly decentralized.
First, the world polity is rapidly expand-
ing, in numbers and in spread. Multinational
corporations (MNCs; Chandler and Mazlich,
2005; Jones, 2005) and international organi-
zations, both governmental (Diehl, 1997) and
nongovernmental (Boli and Thomas, 1997,
1999), are increasing in numbers. For
example, ‘since 1850, 25,000 private, not-
for-profit organizations with an international
focus have debuted on the world stage’ (Boli
and Thomas, 1997: 174) and some 65,000
MNCs existed as of the year 2000, almost
doubling in numbers during the last decade
of the twentieth century (Roach, 2005). This
expansion in formal organization has also
been experienced at the national and
subnational level (Drori, Meyer and Hwang,
2006: 2–6). And, although most organiza-
tion is concentrated in the Western and devel-
oped world (Beckfield, 2003; Roberts,
2005), it is under the canopy of global
extension and universal purpose, thus signal-
ing the expansion of the relevant social
unit to the global over and above increases
in global production and global political
integration.
458 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Second, the rapid expansion of world
polity pulls into it more and more social
actors, resulting in a highly heterogeneous
network of organizations. To begin with, it
brings more types of organizations into its
web. In addition to nation-states (which are
the obvious actors in an international system),
world society today also includes interna-
tional governmental organizations (Diehl,
1997) and international nongovernmental
organizations (Boli and Thomas 1997, 1999).
As a result, the much debated concern with
the demise of the nation-state in the age of
globalization (Meyer, 1999; Arrighi, 2000)
yielded the nation-state that is one organiza-
tional form in a global heterogeneous net-
work of organizations. Private corporations
(Chandler and Mazlich, 2005; Jones, 2005),
professional groups or experts (Sahlin-
Andersson and Engwal, 2002; Jang, 2006;
Moon and Wotipka, 2006), and civil-society
movements (Hafner-Burton and Tsutsui,
2005; Shanahan and Khagram, 2006) are also
added to this already diverse polity. In this
context, the nation-state is less of a rational
instrument and more of a scripted rationaliz-
ing account.
Heterogeneity is also evident in substantive
terms. This growing network of international
and transnational governmental and non-
governmental organizations is active on a
wide range of issues and in numerous sectors.
Although the dominant global organizational
field is economic, including trade, industry,
and development (Chabbot, 1999), substantial
organizing is also evident in the fields of med-
icine and healthcare (Inoue and Drori, 2006)
and the sciences (Schofer, 1999). Together,
these three fields alone account for over
44 percent of the total of international non-
governmental organizations active in 1988
(Boli and Thomas, 1997: 183). With the reori-
entation of world society since the late nine-
teenth century toward universalized and
individualistic themes, there has also been a
dramatic structuration of the field of human
rights (Tsutsui and Wotipka, 2004) and the
rights of specific groups (for example,
women; Berkovitch, 1999) and a marked stag-
nation in organizing around collective themes,
such as labor and religion (Boli and Thomas,
1997: 184). Today, the substantive scope of
global organization covers many issues, from
standardization (Loya and Boli, 1999) and the
environment (Frank, 1999; Frank et al., 1999)
to education (Ramirez and Ventresca, 1992;
Schofer and Meyer, 2005) and law (Boyle and
Meyer, 1998), to name a mere few.
Third, world polity is dynamic and ever-
changing, in scope and in content. Rates of
organizing accelerated exponentially at three
obvious historic turning points: the late nine-
teenth century (when Enlightenment Age
ideals merged with nationalism to form the
basis for twentieth-century processes), 1945
(the end of World War II), and 1990 (the
collapse of the Soviet bloc). Any slowdown
in the rate of founding of international non-
governmental organizations was confined to
the periods of the two world wars (Boli and
Thomas, 1997: 175–176) and quickly
resumed, with fierce persistence, immedi-
ately following them. At these historic
turning points there was also a marked
change in the issues that form the globally
organized fields: although most global issues
sprang out of the nineteenth-century Western
agenda, many additional issues were raised
to global consciousness and formed networks
of global action while others have been stag-
nating or even receding. For example, while
ecology and natural conservation were
‘almost invisible on the world agenda’ in
1875, by 1990 ‘a plethora of conferences,
treaties, and intergovernmental and interna-
tional nongovernmental organizations dotted
the global stage’ (Frank et al., 1999: 83).
Similarly, ‘in the late nineteenth and early
twentieth centuries, the discussion of
population control was largely taboo in the
public domain,’ yet by the late 1960s
‘population had become a routine matter of
public interest’ (Barrett and Frank, 1999:
199–200).
Established issues have also changed their
orientation. For example, global concern
with health, which has been organized glob-
ally since premodern times, has changed
from being perceived as a form of charity
work through visions of it as a professional
 INSTITUTIONALISM AND GLOBALIZATION STUDIES
activity and as a tool for development to now
being perceived as a basic human right
(Inoue and Drori, 2006). Similarly, while
eugenics dominated the global field of popu-
lation control until World War II, ‘the
detestable use of eugenics by Nazi Germany
turned the global tide against this model’ and
reoriented the field to embrace neo-
Malthusian and individual choice frame-
works (Barrett and Frank, 1999: 207).
Adding to the fast transition, the changes in
global fields have affected the embedded
units. International organizations, in both
general and in specific fields, have influ-
enced the behavior of nation-states: in
governance (Drori, 2006), human rights
(Hafner-Burton and Tsutsui, 2005), science
(Finnemore, 1993), and rules of war
(Finnemore, 1996a). The intervention of
international organizations as ‘teachers of
norms’ (Finnemore, 1996a) or as conveyors
of ‘normal’ expectations (McNeely, 1995)
has worked to encourage national legislation,
initiate local programs, and energize local
social action groups, even though loose
coupling has caused frequent failure of
implementation.
Last, the world polity is organized in a
rather loose and decentralized manner, look-
ing much like de Tocqueville’s description of
American associational society in the late
eighteenth century (Meyer, Drori and
Hwang, 2006). The most dominant feature of
world society is its diffuse authority, or gov-
ernance, structure: the world polity is state-
less (absent a world state) and thus
decentralized. While relying on the nation-
state as an organizing principle and while
sanctifying the related myth of sovereignty,
the global system did not evolve to replicate
this format to the global level: even the dom-
inant governmental organization, the United
Nations, has evolved without the shoring of
muscular power or decisive action; rather, it
is carrying its global missions in partnership
with many nongovernmental, for-profit,
and benevolent partners. Adding to this state-
lessness is the fact that the most dramatic
expansion is in global civil society or non-
governmental and not-for-profit organizations,
459
whose numbers overwhelmed even the grow-
ing numbers of nation-states, intergovern-
mental organizations, and transnational
firms. This diffuse nature of authority is
reflected in the looseness of conformity
mechanisms, combining coercive and ‘soft
law’ strategies to encourage compliance with
international laws and global norms alike
(note the three distinct theoretical stands
about such ‘soft’ compliance are propounded
in Abbott and Snidal, 2000; Barnett and
Finnemore, 2004; Djelic and Sahlin-
Andersson, 2006). The "softness" of compli-
ance is dramatized by the fact that the
overwhelming majority of international
organi-zations are transnational or global
nongovernmental voluntary associations
(Boli and Thomas, 1999). In this form,
which is interpreted as ‘global corporatism’
(Ottaway, 2001) or ‘new global governance’
(Pattberg, 2005), authority is derived from
the legitimacy of culture models that are car-
ried by global civil society and its network of
organizations. In summary, while the scope,
even if not the power, of international organ-
izations grew over the twentieth century, the
diffuse forms of their authority, coupled with
the universalized language of their princi-
ples, only worked to enhance their cultural
authority further.
Common explanations of this expansive,
heterogeneous, and loose global organizing
cite the pressures of globalization and related
competition. The conception of globalization
as intensification of exchange and competi-
tion (for example, Keohane and Nye, 2000)
or as transference (Bertelson, 2000) explains
the zeal to organize in functional terms.
Specific to not-for-profit organizing, the
functional imperative is in the centralization
of collective action and its related efficiency.
Kenneth Abbot and Duncan Snidal (1998: 5)
explicate this utility of international
organizations: ‘[International organizations]
allow for the centralization of collective
activities through a concrete and stable
organizational structure and a supportive
administrative apparatus. These increase
the efficiency of collective activities and
enhance the organization’s ability to affect
460 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
the understandings, environment, and inter-
ests of states.’ So, whether focusing on eco-
nomic viability or political coordination and
thus whether realist (Keohane and Nye,
2000), neoconservative (Abbot and Snidal,
1998) or neo-Marxist (Wallerstein, 2000;
Sklair, 2002), the explanation rests on the
complexity of the increasingly global social
system: demands exerted by globalization
compel formal organizing. Yet these utilitar-
ian perspectives ignore the reality where
rates of organization outpace increases in
common or related social demands (Drori
et al., 2006: 9–11). They also overlook the
extent of organizing, whereas the drama of
organization is experienced not only in polit-
ical and economic spheres but also, if not
mainly, in social spheres, such as rights and
education (see Boli and Thomas, 1997,
1999). Last, utilitarian explanations fail to
take into account the institutional constraints
imposed by globalization, mainly the
requirements for greater standardization
and rationalization imposed by the self-
organizing and self-reinforcing system of
world society (Drori et al., 2006).
Institutional explanations of the expansion
of the world polity, although naming global-
ization as the root cause, center on three par-
ticular features of globalization: (a) the rise
of the world as the relevant social unit; (b)
rationalization and standardization processes
that are carried by the rising legitimacy of
science and expertise; and (c) the rising and
globalizing culture of actorhood and empow-
erment (Meyer et al., 2006; see Figure 18.3B).
These three features, which are both cultural
and structural, combine to imprint various
globally embedded social units with the now
acceptable features of the modern person and
the modern organization. The world polity
marks the legitimate institutional themes and
anchors them in formal structures. Most
importantly, it shapes the structures and
behavior of embedded societies: ‘The impe-
tus for [local or national] action came from
the transnational level. As states entered the
process, they responded not only to their own
or societal interests but also to the global
conceptions and principles promoted by
INGOs’ (Boli and Thomas, 1997: 187).
In this global structuration, the various fields
of international organization set examples
of duality between structure (form or polity)
and culture (content). Global organization
not only marks the field of global action,
but rather also sketches the boundaries of
world culture.
World culture
Formally defined as the ‘definitions, princi-
ples, and purposes [that] are cognitively con-
structed in similar ways throughout the
world’ (Boli and Thomas, 1997: 173), world
culture encodes the models and institutions
that are made sacred. With international
organizations of various types and forms as
its formal embodiment or framework, world
culture took shape: tracing the drama of
global structuration, ‘post-War period has
witnessed rapidly expanding moral mobili-
zation, that is, exponential increases in the
recognition and rationalization of virtue and
virtuosity’ (Boli, 2006: 113). This cultural
praxis worked to enhance the vision of global
parameters for human society and to further
encourage organization on a global scale,
which has escalated even more during the era
of hyperglobal-ization since the end of the
twentieth century.
The breadth and complexity of world
polity traces the dimensions of world culture,
primarily expanding the issues directly pro-
nounced as global. As mentioned earlier, the
range of issues that mobilized world action
and were highlighted as important and
valued world over – again, from human
rights to environmentalism to inequality –
expanded rapidly and extend way beyond the
trends of global consumer culture (Ritzer,
2004b). Yet, in spite of this variety in specific
issues, the primary cultural themes remain
guided by progress and justice (Drori, 2005).
These twin pillars of Western, now global,
culture (Meyer et al., 1987) mark the sancti-
fied themes of the still evolving global nor-
mative consensus.
 INSTITUTIONALISM AND GLOBALIZATION STUDIES
Although culture is an illusive concept, the
recognition of the global moral order comes
in celebrations (announcements and titles)
and certifications (awards and licenses),
which vary by degrees of formality and
rationalization (Boli, 2006). For example,
using the practice of UN dedications as a
‘metric’ for the scope of world norms (Drori,
2005), it is obvious that some issues are more
valued than others. Specifically, issues linked
with the principal themes of progress and
justice are privileged as global norms: among
the 127 issues highlighted by UN dedica-
tions, 100 (or 79 percent) directly address
issues of development and rights (Drori,
2005: 182–183); issues relating to security,
sovereignty, and culture are relatively
marginalized. Also, observing the rates of
structuration of fields similarly exempli-
fies the obvious dominance of the themes
of progress and justice: as shown in
Figure 18.2, the sizes of the global organiza-
tional fields of development and human
rights dwarf all others.
The specific substantive issues exalted
worldwide are infused with two general
logics: rationalization and actorhood (Meyer
et al., 2006). Rationalization, or the system-
atization and standardization of social life
(Jepperson, 2002: 257) with scientization as
its pronounced axis (Drori and Meyer, 2006),
establishes organizational sites and nodes. It
calls for coordination, supervision, planning,
and study, all of which build on the mythol-
ogy of universality, thus undercutting
mythologies of national or local culture and
further enhancing the spirit of a world soci-
ety. Intertwined with the notion of an ordered
world is the notion of the world as manage-
able, expressed in the theme of actorhood, or
the sense of empowered agency attributed to
social actors (individuals and organizations
alike; Meyer and Jepperson, 2000). The
decentralized or stateless nature of the
modern world polity reflects and supports
this sense of agency: the empowerment of
individuals, associations, and firms is
enabled by the sense of openness in the polit-
ical realm, in the unbounded market, and in
461
the urgency of social problems. These two
cultural features – rationalization and actor-
hood – imprint organizations, behaviors, and
practices, resulting in a hyperactive world
society, increasingly proactive through
organizations and guided by world culture.
Several issues that are essential to global-
ization studies are highlighted in the institu-
tionalist study of world culture. First, in
discussion of world culture, globalization
debates about trends and trajectories (com-
monly between the dichotomy of conver-
gence and divergence) take the form of
questioning global moral unity. Although the
global reaches of world culture expand
rapidly, along with the rapid expansion of
other dimensions of globalization, there are
still obvious expressions of national culture,
cultural regionalization, and ‘glocalization’
(see, for example, Helacioglu, 2000;
Robertson, 1994). By fracturing global
cultural work, local culture serves as a prism
for the influence of international organiza-
tions (see, for example, Wiktorowicz, 2002),
as it is also constituted by their influence and
work (see, for example, Drori et al., 2003,
regarding the effects of global scientization
trends on the constitution of rights).
Second, in discussions of cultural colo-
nialism, world society is described as rooted
in European Enlightenment and nationalism,
and thus its development is described as
intertwined with modernity (Meyer et al.,
1987). Institutionalists describe the long his-
tory as stretching over almost two centuries,
before intensifying dramatically after World
War II (Meyer, 2000; Djelic and Quack,
2003: 4), and thus distinguishing this
cultural change from the longer historic trail
of capitalism (Wallerstein, 1979). Currently,
globalization is laden with characteristically
modernist themes from the nation-state
and scientization to the individual, and in
particular, of course, the themes of progress
and justice.
Third, in discussions of the tension
between form and content and between cul-
tural norms and the actors that propagate
them, this institutional emphasis on world
462 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
culture stabilizes the study of international
organizations and of globalization by them. It
suggests that ‘movements that anchor them-
selves in the moral order are especially likely
to flourish’ (Boli, 2006: 116) and thus
explains the rise of particular fields of global
organization within the cultural trends of
modern world society and the cultural (and
ideological) themes of this era. In this sense,
international organizations are made up of
actors, including themselves (McNeely,
1998), while also serving as carriers of these
themes and diffusing them to other embedded
units. Similarly, individuals are constituted by
the professions that celebrate agency: individ-
ualism takes root where psychology (Frank,
Myere and Miyahara, 1995) or where human
resource management (Luo, 2006) flourish.
In this way, comparative institutionalism, in
also marking the phenomenological pole of
organizational institutionalism, has departed
from ‘old’ institutionalism in its focus on cul-
ture and on rationalization. If by institutional-
ism people are embedded in habit and custom
and thus consideration is given to the tension
between free-will and determinism, current
discussions, especially in world society stud-
ies, regard people as rationalized actors, and
thus consideration is given to the tension
between structure and agency.
The emphasis on the culture of rationaliza-
tion and actorhood is more than a semantic
move: this dialectic change in discourse
reflects the break with path-dependent theo-
ries (ecological determinism of some) and a
focus on traditional social science (rather than
strategic and managerial) perspectives. It also
means a straightforward focus on culture
as a fundamental social factor, as strongly
expressed in world society-type explanations
(for example, Drori, Jang and Meyer, 2006).
This highly cultural perspective, even in its
most phenomenological works, is neverthe-
less anchored in a highly empirical research
tradition. As a result, the institutionalist study
of world culture and world polity is grounded
in formidable empirical descriptions of these
otherwise illusive sociological terms and
complex global processes.
EMPIRICAL TRADITION
World society theory, much like the social
issues it comments on, is a distinctly global
perspective. Meyer’s work is clearly influ-
enced by the early European sociology of
Émile Durkheim and Max Weber, yet it is
also heavily infused with American empirical
tradition. As a result, world society theory
has always emphasized the role of meaning
and culture as explanatory factors in social
processes while demonstrating trends and
causes in quantitative empirical research
with sophisticated statistical tools.
Schofer and McEneaney (2003) and
Schneiberg and Clemens (2006) offer superb
summaries of world society research agenda
and research tools. In accordance with the
dual definition of globalization as simultane-
ously a process of the consolidation of the
global and of cross-nation diffusion, institu-
tionalist research strategies for studying
globalization apply a two-pronged approach.
And each of the specific directions of
research is associated with a series of
research questions, studying the related insti-
tutional conditions and mechanisms.
Table 18.2 summarizes the mounting empiri-
cal research of this tradition.
As is evident in Table 18.2, the body of
empirical research from a comparative and
institutional point of view is rather prolific.
Institutional assumptions and their related
propositions have been applied to various
issues and fields (from science and rights to
environmentalism and management, to name
just a few) and across sectors (from the
public to the private, from the for-profit to
civil society). They have also been applied to
the study of both institutionalization (at both
the global and the national levels) and diffu-
sion (across embedded units, most often
nation-states). Empirical research in this tra-
dition has relied on a variety of methods:
while most studies rely on statistical methods
(frequently, regression models or event his-
tory analyses; see Schofer and McEneaney,
2003, for a detailed review of strategies),
more and more studies add a component of
 INSTITUTIONALISM AND GLOBALIZATION STUDIES
Table 18.2 Institutional research of globalization: review of research agenda, tools,
and examples
Globalization Research agenda
As consolidation of Characteristics of world
the global society
1. Rationalization
2. Diffuse authority;
statelessness
3. Actorhood, individualism
4. Rise of the global
Institutionalization
process; expansion
1. Normative
consolidation over time
2. Historical change of
dominant models
3. Embeddedness
intensifying over time
Origins
1. World events
2. Relations with other
themes or models
As worldwide Features of diffusion:
diffusion 1. Adoption across types
of globally embedded units 1-B. Adoption across other types of embedded units: Luo (2006)
2. Decreased variation
among globally
embedded units
Causes:
1. Absence of effect
from local needs or
conditions
2. World society
influence:
A. Effects of
embeddedness in world
polity
B. Effects of particular
international organizations
463
Examples
1. Formalization, standardization, and scientization
2. Network rather than hierarchical structure
1, 2. Frank et al. (1999) on nature and environmentalism, Jang
(2006) on transparent governance, Boli and Thomas (1997,
1999) on global civil society
3. Frank et al. (1995) and Frank and Meyer (2002) on person-
hood, Luo (2006) on personnel training
4. Hwang (2006) on references to the global, Drori (2006) on
expressions of global cultural appreciation
1-A. Numbers and founding dates of international organizations,
by field, over time. Drori (2006) on governance, Chabbott (1999)
on development, Tsutsui and Wotipka (2004) on human rights
1-B. Number and confirmation dates of international
conventions and agreements, by field, over time. Frank (1999)
on environmental treaties, Wotipka and Ramirez (forthcoming)
on ratification of women’s rights convention, Berkovitch (1999)
on world conferences on women, Barrett and Frank (1999) on
population control conferences
1-C. Number of references to themes, in literature, by issue, over
time. Drori (2006) on governance, Moon and Wotipka (2006)
on management education
1-D. Number of founding dates of practices in embedded units,
by field, over time. On national practices: Hwang (2006)
on strategic planning, Mendel (2006) on standardization
On practices in other units: Luo (2006) on corporate training
2-A. Consolidation: Drori (2006) on governance
2-B. Change in dominant themes: Schofer (1999) on science,
Berkovitch (1999) on women, Barrett and Frank (1999) on
population policies, Inoue and Drori (2006) on health
3. Boli, Loya, and Loftin (1999) on membership in INGOs
1-A. Historical turning points, most obviously World War II
(Barrett and Frank, 1999)
1-B. Period-specific effects: Jang (1999) on science
2. Schofer and Meyer (2005) on higher education
1-A. Adoption across nation-states: Boli (1987) on constitutional
rights, Finnemore (1993) and Jang (2000) on science
on human resource management in corporations
2-A. Isomorphism across nation-states: Ramirez and Ventresca
(1992) on education
2-B. Isomorphism across other embedded units: Luo (2006)
on corporate training
1. Schofer et al. (2000) on science and economic
development, Finnemore (1993) and Jang (2000)
on science, Drori (2006) on governance
2-A. Effects of national membership in international
organizations: Drori, Jang and Meyer (2006) on
governance, Jang (2000) on science ministry
formation, Schofer and Hironaka (2005) on
environmental protection
2-B. Effects of missions by IO experts: Finnemore (1993) on
UNESCO and national science policy bodies, Strang and
Chang (1993) on ILO and welfare expenditure, McNeely (1995)
on UNESCO and education policies
Continued
464 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Table 18.2 Institutional research of globalization: review of research agenda, tools,
and examples – cont’d
Globalization Research agenda
C. Imputing effects of
experts and expertise
D. Endorsement by
embedded units
E. Location in world society
Outcomes:
1. Loose coupling between
policy and practice
2. Unintended consequences
content analysis (for example, Drori, 2006;
Hwang, 2006). This research tradition has
been true to its aspiration as commentary
about historical change by compiling rich
longitudinal data and relying on change and
causation methods. And while the studies
cited in Table 18.2 refer strictly to compara-
tive research (it relies on a wide range of
cases for the study of diffusion), numerous
institutional studies document the process of
diffusion into particular countries (for exam-
ple, various chapters in Sahlin-Andersson
and Engwall, 2002) or on particular organi-
zational sites (for example, various chapters
in Djelic and Sahlin-Andersson, 2006).
This impressive empirical corpus is not
without weakness, in regards to both data and
conceptual issues. The obvious weakness
emerges from the availability of data: data
about the global system as the unit of analy-
sis are available only once we conceive of
this unit as relevant and thus are available
only for the recent period and only for an
incomplete list of social issues (Hwang,
2006). Similarly, data on nation-states are
available only since the nation-state was con-
ceived as the ‘imagined community,’ and thus
longitudinal empirical studies of cross-
national patterns have been possible only
since the nineteenth century. Seeing this
challenge, world society researchers have
come up with a range of original longitudinal
indicators for global social change: from
global measures of international organiza-
tions and their discourses (for example, Boli
Examples
2-C. Finnemore (1993) on science policy
2-D. Frank (1999) on environmental treaties
Wotipka and Ramirez (forthcoming) on ratification of women’s
rights convention
2-E. Strang (1990) on colonial ties, Drori, Jang and Meyer (2006)
on essential and peripheral differences
1. Drori et al. (2003) on science, Hafner-Burton and
Tsutsui (2005) on human rights
2. Drori et al. (2003) on science and democratization, Drori
and Meyer (2006) on scientization and organization
and Thomas, 1997, 1999), conferences
(Berkovitz, 1999), and treaties (Frank, 1999)
to cross-national density of ministries (Jang,
2000; Kim, Jang, and, Hwang, 2002), treaty
ratification (Wotipka and Ramirez, 2008),
and numerous other local practices. Although
world society scholars have built an impres-
sive set of cross-national data across a variety
of social issues, these studied are still lim-
ited. Most important, although the availabil-
ity of historical indicators for globalization
on its dual levels is sure to improve with our
growing interest in global studies, the compi-
lation of data poses a problem of reification.
Specifically, cross-national analyses con-
tribute to the reification of nation-states:
while we debate the role and future of
nation-states in an increasingly global and
transnational world, we rely on national data
to describe diffusion processes. Here, world
society scholars share research challenges
with many other institutional scholars, across
disciplinary lines: Sharing the desire to
remain faithful to constructivist and pheno-
menological assumptions, while at the same
time wishing to ground its theory in conven-
tional empirical tradition of social science
research.
JUNCTURES, OR BEYOND SOCIOLOGY
Complicated further by the newness of the
term globalization, the debates surrounding
globalization are complex ‘since there are no
 INSTITUTIONALISM AND GLOBALIZATION STUDIES
definite or fixed lines of contestation’ (Held
and McGrew, 2000: 1). Guillén (2001),
in reviewing mainly sociological literature,
revealed the complex nature of current
debates by outlining the cross-cutting
answers to the main questions in these
debates. In this sea of literature on globaliza-
tion, institutional comparative work has
engaged many of the established issues.
Many scholars – from communitarians
(Etzioni, 2004) to IR institutionalists
(Ruggie, 1998; Wendt, 1999) – employ the
terms world society and world polity.
Similarly, many scholars analyze world
norms: of humanitarian aid (Finnemore,
1996a), national security (Katzenstein,
1996), and sovereignty (Krasner, 1999).
Further, commonalities extend to several
other bodies of literature, along different
conceptual and substantive shared themes:
the role of the professions (Dezalay and
Garth, 1996), even if the world society
approach is less instrumentalist; the consoli-
dation of world order, among conservatives
(Slaughter, 2004), cosmopolitanists (Held,
1995, 2003; Beck, 2006), or communitarians
(Etzioni, 2004), even if the world society
approach is less deterministic; and the influ-
ence of inherent ordering logics, as in
Foucault’s work on governmentality, even if
the world society approach attributes
less influence to the power and interests of
government.
Still, in general, even these common uses
of such concepts as liberal embeddedness are
challenged by the constructivist view. In
other words, although the obvious presence
of globalization led many researchers to con-
sider the consolidation of international
regimes that govern world affairs (for exam-
ple, Ruggie, 1982; Krasner, 1983;
Moravcsik, 2000), most IR scholars regard
international regimes as governed by the
power of a few players and as arenas for
international cooperation (Moravcsik, 2003),
rather than conceiving of them as constituted
authorities. Even in recognizing the
importance of knowledge and expertise to
the authority of international organizations,
465
conservative IR scholars who recognize the
magnitude of this phenomenon fail to
address the axiomatic institutional claim that
the social construction of knowledge is
intertwined with the social construction of
reality (see Barnett and Finnemore, 2004: 29,
for a review). This unease with the highly
constructivist tone of world society work is
clearly expressed in the substantial literature
in IR studies of the role of international
organizations in producing the obvious simi-
larity across nations: such work (Finnemore,
1996a; Barnett and Finnemore, 1999;
Khagram, Riker, and Sikkink, 2001) explic-
itly distances itself from world society
arguments (Finnemore, 1996b).
These debates expose the gulf between
world society theory and other theories in
globalization studies. IR attempts to ‘bring
society back in’ by considering regimes
(Krasner, 1983) and epistemic communities
(Haas, 1992), which, although they shared
the challenge to the state-centric view with
world society theory, still could not accept
the highly constructivist and cultural empha-
sis of institutionalism. Therefore, current IR
studies of network relations among various
global actors (for example, Ottaway, 2001;
Pattberg, 2005) still reject the rationalized
and ritualized nature of such partnerships
and fail to see this new mode of global gov-
ernance as itself a period-specific mythology
of management (Drori, 2006).
INSTITUTIONALIST FOCUS ON THE
GLOBAL: A SUMMARY
Institutional theory developed contempora-
neously with the consolidation of globaliza-
tion as a field of inquiry and commentary.
Today, some thirty years after the
institutional breakthrough and twenty years
into the ‘era of globalization,’ it is clear that
institutional thought influenced globalization
discussions. Even more, it is clear that
comparative and global studies have con-
tributed to the advancement of institutional
466 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
thinking. In current scholarship, the follow-
ing institutional propositions have been
applied to interpret globalization processes.
First, the institutionalization argument: Over
time, cultural themes institutionalize at the
global level – evident in the expansion of
policies and practices and in the consolida-
tion of particular models or scripts – to create
the global environment in which societies,
organizations, and individuals are embedded.
Second, the diffusion argument: Once
globally institutionalized, a model diffuses to
the various units in the relevant field. Global
diffusion brings the script (in its various
forms as a practice, a structure, and an idea)
to be enacted by entities embedded in this
environment. Global diffusion is supported
by the ideas of universality of knowledge and
the features of society.
Third, the embeddedness argument:
Nesting in, connections with, and openness
toward globalized and rationalized institu-
tional models and their carriers result in
‘contagion.’ Therefore, relations of various
forms and degrees of intensity affect the
propensity to adopt a model and enact its
script. In explaining ‘higher-order’ effects
on globally embedded social units, some
describe the pressure of world society as the
work of social movement (Bartley, 2003),
while others explain this pressure as highly
diffuse and indirect (Meyer, 2000).
Fourth, the argument regarding the role of
carriers: Particular international and transna-
tional players serve as carriers of the institu-
tionalized global models, using various
strategies of influence and socialization that
result in isomorphism.
Fifth, the institutional change argument:
In the face of institutionalization (of models
and their carriers), social actors change to
conform with or adapt to the new legitimate
script. This change is an integral part of
the process of institutionalization, further
reinforcing a sense of a field. And although
change has not been without conflict over
meanings and over the form that practices to
convey the meanings take, globalization has
resulted in dramatic isomorphism and con-
siderable convergence (Meyer et al., 1975).
Sixth, the isomorphism and decoupling
argument: Ceremonial commitment to the
globally institutionalized models, structura-
tion based on symbolic gesturing, and
gratuitous compliance with universalized
standards result in loosely connected struc-
tures, action, and formal discourses. Surely
not all particularistic factors dissolve in the
face of external influences; rather, various
studies show that national (for example,
polity type), organizational (for example, size),
and sector-specific (for example, economic
impact) features influence the diffusion of
practices. This influence creates a varied
landscape of conditions that often maps onto
variations in embeddedness and is captured
in the notion of ‘glocalization.’
Seventh, the cost of isomorphism argu-
ment: Global isomorphism bears unique,
possibly costly or negative effects on stated
goals of performance, thus explaining much
of the failure in the implementation of poli-
cies in developing countries and the embrac-
ing of management ideologies into corporate
practices.
Eighth and last, the unintended conse-
quences argument: Global isomorphism
results in social changes that were unintended
and unplanned in the formal performance
goals. The unintended outcomes diffused and
institutionalized worldwide in addition to, yet
in a loose connection with, the diffusion of
formal scripts of planned goals of perform-
ance. Drawing on Merton’s (1936) canonized
work on the ‘unanticipated consequences of
purposive social action,’ the institutional
explanation of systemic failure hinges on
the primacy of institutional considerations in
action and thus on inherent structural condi-
tions, rather than on the bias of intensions or
the inefficiency of communications.
Together, these canonized arguments
focus on the process of institutionalization,
on its antecedents (or causes), on its features,
and on its consequences. The different
emphases of the arguments describe histori-
cal processes and today’s conditions and
identify causal mechanisms, as well as com-
menting on the trajectories and impacts of
institutional forms.
 INSTITUTIONALISM AND GLOBALIZATION STUDIES
In contrast, realist perspectives fail to
explain many of the trends often considered
as ‘globalization.’ In their insistence on
seeking power and interests, they are unable
to explain the rise of many global social
movements – from human rights (Hafner-
Burton and Tsutsui, 2005) and gay and
lesbian legislation (Frank and McEneaney,
1999) to science (Drori et al., 2003) – and the
persistently loosely coupled nature of such
movements. The justifications for the expan-
sions are themselves rationalized scripts, and
whereas the explanatory factors are mainly
related to emebeddedness in world society.
With its strongest statement by Meyer
et al. (1997) and with explication of organi-
zation (Meyer et al., 2006) and science and
expertise (Drori et al., 2003), world society
theory has articulated explanations for cross-
national diffusion, global structuration, and
the cultural and historical trends that drive
them. Staying on its current course from
empirical longitudinal studies, this tradition
will continue to decipher the form and
change of world society. Seeing organiza-
tional fields as dimensions of world society,
it will continue on the path of studying the
model in both form and in content, as well as
its historical trajectory in both dimensions
and its antecedents and consequences. And
although current studies focus on particular
global fields (such as environmentalism,
health, governance), more can be studied
about world society from the new research
across these global fields. The research
moves from a mapping stage (of content and
structure and their historical change) to
assessing the principles that are possibly
imprinted in the various fields, regardless of
their focus on specific issues. This work can
also extend world society explanations to
new global phenomena. Such rising organi-
zational fashions, or fads, can be outlined by
their various institutional manifestations:
from policy to behavior to structure. Last,
surely the extent of rationalization, as chang-
ing organizational form and function, is
still a virgin part of the study of the cultural
foundations, or causes, for organizational
change.
467
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Organizational Institutionalism
and Sociology: A Reflection
C.R. Hinings and Pamela S. Tolbert
In 1991, DiMaggio and Powell observed:
Institutional theory presents a paradox.
Institutional analysis is as old as Emile Durkheim’s
exhortation to study ‘social facts as things’, yet
sufficiently novel to be preceded by new in much
of the contemporary literature. (1991: 1)
We argue that this paradox is, at least in
part, the result of a long-standing tension in
sociology between more materialist, interest-
driven explanations of behavior and
ideational, normative explanations, a tension
that has often driven oscillating waves of
sociological theorizing. It underlies many
classical debates (e.g., between Spencer and
Durkheim, Weber and Marx, and even
Parsons and Mills), and the waves of theory
associated with it have produced a variety of
‘neo-isms’, including neo-Marxist as well as
neo-institutionalist theories. This distinction
in explanatory approaches is linked to a more
general theoretical problematic for sociolo-
gists: how to provide a single, coherent
account of both stable, persisting patterns of
social behavior, and the breakdown and elim-
ination of what were once deeply-entrenched
patterns. In this chapter, we examine the his-
tory of these distinctive explanatory
approaches in sociology, and locate the
19
origins of contemporary institutional work
on organizations within this context. We also
consider how more recent organizational
analyses in the tradition of institutional
theory have been driven by and reflect this
basic tension.
It is not surprising that current institution-
alism embodies core theoretical issues within
sociology: The roots of this approach to
organizational analysis are firmly planted in
the discipline. Tracing the intellectual
genealogy of institutionalism, Scott’s list of
contributing scholars (2001) includes
Spencer, Sumner, Cooley, Hughes, Marx,
Durkheim, Weber, Parsons, Mead, Schutz,
Berger, and Luckmann – a veritable pantheon
of sociological theorists! Thus, it is almost
inevitable that the issues addressed by
institutionalists are, in many ways, those of
central concern to general sociology.
Sociology focuses on understanding the
nature of both the material arrangements and
the normative systems that characterize
collectivities, and the influence of these on
action; this is the same agenda that defines
and drives institutional analyses of organiza-
tions. Given the relationship between the
field of sociology as a whole and institutional
474 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
studies of organizations, and the claim that
most eminent, historical sociologists are
forerunners of institutional theory, the time is
ripe to revisit the origins and evolution of
institutional theory and to ask the question of
how far the work of those forebears is truly
represented in contemporary scholarship.
And this will inevitably lead to the questions,
in what ways has institutionalism added to
the earlier theoretical insights – and in what
ways may the earlier insights have been lost
in more contemporary studies?
THE FORERUNNERS
The starting point for this discussion has to
be Dick Scott’s (2001) Institutions and
Organizations as it provides a comprehen-
sive overview of the institutionalist approach
to organization theory. While Scott identifies
seminal links between this approach and a
wide range of theorists, we focus more nar-
rowly on a particular set of the progenitors he
discusses, ones we see as contributing most
directly to the contemporary formulation of
an institutional approach and to the ongoing
debates within it. Therefore, we will begin by
examining the work of four major theorists
as paired sets, Spencer and Durkheim, first,
and then Marx and Weber. In our view, the
point–counterpoint relations between these
theorists offer useful insights into unresolved
theoretical problems that are embedded in
much of the development of current institu-
tional theory. Within this context, we will
consider the four pieces that DiMaggio and
Powell (1991) label as the initial formula-
tions of institutional theory, namely, Meyer
and Rowan (1977), DiMaggio and Powell
(1983), Zucker (1977) and Scott and Meyer
(1983).
Spencer and Durkheim
Among the four streams of early sociological
theorists that Scott considers as foundational
for institutional theory, the first includes
the work of Herbert Spencer. Although
Spencer’s work is rarely referenced (and
probably read even more rarely) by modern
day sociologists,1 he was generally consid-
ered to be the preeminent sociologist of
his time (Turner and Beeghley 1981).
To describe his work as ambitious is to
seriously understate the case; Spencer’s over-
arching goal was to discover the fundamental
set of principles that defined the functioning
of physical, biological and social worlds.
Although the scope of this aim is amusingly
quaint from a contemporary standpoint, it’s
worth noting that one of his ‘laws of the
cosmos,’ that increasing size in any social
unit is accompanied by increasing differenti-
ation, anticipated a staple finding from much
later empirical studies of organizations
(Blau, Heydebrand, and Stauffer, 1966; Hall,
Clark, Giordano et al., 1967; Pugh, Hickson,
Hinings, and Turner, 1969).
In describing the nature of society,
Spencer argued that social systems are made
up of a series of subsystems, and that each
subsystem and its institutionalized structures
serve distinctive functions for society as a
whole. As Scott (2001: 9) points out, ideas
about ‘the functional division of social life
into spheres or arenas – kinship, stratifica-
tion, politics, economics, religion, and so
on,’ have been central to much
sociological theorizing. As we discuss in
more depth below, this conception of
‘institutions’ – as core, distinguishing,
societal-level patterns (structures) that char-
acterize one area of social life, and that are
fundamentally interlocked with each other –
is much broader than the conception often
implied in more contemporary work
(although, unfortunately, the latter is no more
likely to define the concept of institution
explicitly and clearly than Spencer or other
early theorists).
Importantly, as an adherent of utilitarian
philosophy, Spencer also made the case that
these structures arose naturally through a
process of competition and exchange among
individuals who, in the rational pursuit of
 ORGANIZATIONAL INSTITUTIONALISM AND SOCIOLOGY: A REFLECTION
their own self-interests, entered into
contracts that facilitated such pursuit. Thus,
society was conceived as the nexus of nego-
tiated contracts. Although Spencer did not
address the issue directly, implicit in his
utilitarian and evolutionary arguments is the
notion that when institutionalized arrange-
ments fail to permit the achievement of
agents’ objectives, they are likely to be
subject to re-evaluation and purposeful
change.
Writing in the shadows of the French
Revolution, Durkheim was also deeply con-
cerned with the question of what forces held
societies together. Ultimately, he reached
very different conclusions than Spencer,
although two distinct responses to this ques-
tion are evident in his work (Collins, 1994:
188); the later response is most clearly
opposed to Spencer’s arguments. The earlier
response, focusing on the division of labor
in society, particularly in industrialized soci-
eties, is somewhat more compatible with a
materialist, agency-driven view. In this
instance, Durkheim argued that solidarity
reflects recognition of interdependencies
among members of society created by
specialization. Later work, focusing on what
Durkheim referred to as ‘social facts,’ and
reflecting his increasing rejection of
Spencer’s utilitarian view of society, gives
much more weight to purely ideational,
normative forces that serve as constraints on
individuals’ behavior.
In Rules of the Sociological Method, his
treatise on the distinctive domain of sociol-
ogy, Durkheim argues,
When I fulfill my obligations as brother, husband,
or citizen, when I execute my contracts, I perform
duties which are defined, externally to myself and
my acts, in law and in custom. Even if they con-
form to my own sentiments and I feel their reality
subjectively, such reality is still objective, for I did
not create them; I merely inherited them through
my education … The systems of signs I use to
express my thought, the system of currency
I employ to pay my debts, the instruments of
credit I utilize in my commercial relations, the
practices followed in my profession, etc., func-
tion independently of my own use of them.
(1964: 1–2)
475
Durkheim’s fundamental view of social
behavior expressed here not only runs
directly counter to Spencer’s emphasis on
individuals’ conscious calculation of how
best to pursue independent interests, but
anticipates arguments later offered by Berger
and Luckmann (1967) concerning the limited
ability of individuals to shape social arrange-
ments (which they termed ‘exteriority’), and
the coercive power of these arrangements
over behavior. It is similarly consistent
with Bourdieu’s (1977) concept of habitus.
The primacy that Durkheim assigned to
non-calculative sources of behavior was
highlighted by a pointed rebuttal to Spencer,
in which he observed that entering into
contractual relations necessarily requires a
pre-existing level of trust among society’s
members. Durkheim concluded that such
trust was produced through collective con-
sciousness, the normative commitment and
sense of belonging to a social group (Collins
and Makowsky, 2005: 95–96).2
Marx and Weber
As in the comparison of Spencer and
Durkheim, arguments about the validity and
usefulness of assumptions about the impor-
tance of conscious choice and self-interested
motivations in explaining social behavior
serve as a key point of distinction between
the sociological theorizing of Karl Marx and
Max Weber. Marx was, of course, a material-
ist in philosophy and at the heart of his analy-
sis were notions of conflict, power,
oppression, exploitation and alienation
between classes. In contrast to Spencer’s and
Durkheim’s preoccupation with explaining
the persistence of social order, Marx focused
on forces that led to major transformations in
societies.
Marx’s core argument, that such transfor-
mations were inherent in class relations, was
predicated on the assumption that individuals
who shared a common role in the economy –
a class – would ultimately and inevitably rec-
ognize their shared interests and pursue those
476 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
interests through collective action. Since all
economies were constituted by, on one hand,
a class that profited from control of the
primary means of production and, on the
other hand, classes that lacked control of key
productive resources and thus were subject to
the exploitation of the first, class conflict was
inevitable. As technologies and other factors
changed in ways that provided an exploited
class with opportunities to overthrow the
existing system of relations, Marx argued,
their collective action would result in the dis-
solution of the system and the creation of a
new set of social relations that was consistent
with the interests of the rising class.
Thus, although Marx clearly rejected
Spencer’s belief in the benignity and effi-
ciency of market allocation processes, the
two did share the general conception
of social actors as driven by self-awareness
of material interests.
However, while Marx’s analysis was pred-
icated on the assumption that social action
primarily reflected rational efforts to maxi-
mize material, class-based interests, he did
recognize that individuals sometimes failed
to realize their true class interests – i.e., that
they were subject to false consciousness.
This concept entails an implicit acknowl-
edgement of the role of cultural forces, belief
systems and ideologies, in shaping action as
well. True to materialist logic, though, Marx
located the origins of such forces in the eco-
nomic interests and material capabilities of
the dominant class (Collins, 1994). Thus,
widely-held social beliefs and ideologies
were deemed to be shaped largely by the
dominant class, which had the resources to
influence the production and widespread
dissemination of ideas that were consonant
with their interests (and of course, influence
over state agencies to suppress production
and dissemination of ideas that lacked such
consonance). Moreover, he assumed that
changes in material conditions would
provide the basis for changes in epiphenom-
ena, such as false consciousness. In capitalist
systems, increased opportunities for inter-
action among members of the working class,
in conjunction with the increasing degrada-
tion of work, were considered key forces in
enabling members of the labor class to recog-
nize their true, shared material interests and
to collectively act upon these.
Thus, the key institutions in Marx’s analy-
sis are social classes and their relations, and
his analysis suggests that these institutions
will be stable as long as the dominant class
is able to sustain acceptance of general
ideologies that support them. When condi-
tions changed sufficiently, though, accept-
ance of dominant ideologies was expected
to break down under the weight of revealed
interests, and the institutions to be subject
to challenge and collapse. The previous
system of class relations would then be
replaced by new institutions (new classes,
with new relations of dominance and subor-
dination) that, presumably, were supported
by new ideologies.3
Much of Weber’s analyses can be seen as a
response to Marx’s emphasis on material
interests, and particularly on class relations,
as the driving force in social action. Along
with Spencer, Marx and Durkheim, Weber
was concerned with large-scale social
changes that he saw taking place, changes
that were reshaping the whole nature of
society. Although some have argued that his
analyses directly opposed those of Marx, by
prioritizing ideas and cultural forces as deter-
minants of social action (Parsons, 1937),
most contemporary theorists view his aims
more in terms of tempering, rather than
rejecting Marx’s arguments (Turner and
Beeghley, 1981; Collins, 1994; Swedberg,
1998): his approach to explaining social
phenomena emphasizes the interaction
between material conditions and interests, on
one hand, and subjective interpretations and
meanings on the other (Weber, 1949). Thus,
neither material nor ideational forces are
privileged in his explanations of social
phenomena; rather these forces must be
understood as independent though inter-
twined phenomena.
It is, however, his work on cultural influ-
ences and belief systems that is most clearly
 ORGANIZATIONAL INSTITUTIONALISM AND SOCIOLOGY: A REFLECTION
reflected in at least early formulations of
institutional analyses of organizations. As
Scott (2001: 13) puts it:
‘more contemporary analysts of institutions lay
claim to Weber as the guiding genius than to any
other early theorist. Although Weber did not
explicitly employ the concept of institution, his
work is permeated with a concern for understand-
ing the ways in which cultural rules, ranging in
nature from customary mores to legally defined
constitutions or rule systems, define social struc-
tures and govern social behavior.’
In particular, Weber’s analysis of the nature
of rational-legal authority and its critical role
in the operation of contemporary organiza-
tions provided a key point of departure for the
foundational work in institutional studies
offered by Zucker (1977) and Meyer and
Rowan (1977). Arguing that different forms
of organizations (e.g., patrimonial adminis-
tration, charismatic communes, bureaucracy)
rest fundamentally on different beliefs about
the ‘true’ or ‘proper’ nature of social rela-
tions, Weber sought to delineate key features
of rational-legal authority, a belief system
underpinning the bureaucratic form.
Rational-legal authority entails acceptance of
social relations as rightly governed by formal
laws and regulations which, in turn, are pre-
sumed to be based on rational calculations of
the most effective means to attain given ends.
In this context, obedience is given to persons
based on the formal offices they hold, in part
because their attainment of office is under-
stood to indicate possession of skills and abil-
ities that make them able to execute the tasks
of the office. Weber contrasted this form with
traditional authority, in which social arrange-
ments are accepted as preordained, whether
by a deity or natural law, and charismatic
authority, in which accepted social arrange-
ments reflect the dictates of an individual
who is viewed as possessing supernatural or
magical powers and abilities (Weber, 1947).
This conception of rational-legal authority
as a cultural foundation for modern organiza-
tions was linked, particularly in Meyer and
Rowan’s and Zucker’s initial analyses of
organizational institutions, to work in the
477
tradition of phenomenology, as articulated by
Schutz (1967) and Berger and Luckmann
(1967). As suggested in our discussion
above, such phenomenological explanations
of social behavior have close parallels to
those of Durkheim. For Durkheim, though,
institutions – the forces that produced ‘social
facts’ or enduring patterns of behavior char-
acterizing collectivities – were primarily nor-
mative, operating through the social
solidarity that bound individuals together in a
society (Durkheim, 1947). For phenomenol-
ogists, on the other hand, institutions were
defined more in cognitive terms, as shared
meanings and understandings that arose from
social interaction and shaped behavior
largely by constraining individuals’ cogni-
tions and perceived choices of action. A phe-
nomenological approach to institutions can
also be distinguished from Durkheim’s by
the concern of phenomenologists with expli-
cating the micro-interactional processes in
which institutions originate.
THE INITIAL FORMULATIONS
OF INSTITUTIONAL ANALYSES
OF ORGANIZATIONS
In terms of contemporary institutional analy-
ses, Powell and DiMaggio (1991) have four
articles that they call ‘The Initial
Formulations,’ namely, Meyer and Rowan
(1977), Zucker (1977), DiMaggio and
Powell (1983) and Scott and Meyer (1983).
These expositions show continuity with
the forerunners, but also a distinct break. The
continuity involves theoretical notions of the
bases of social action; the break involves a
specific focus on organizations.
To appreciate, in part, the ‘neo-’ label that
is often attached to this tradition, it is useful
to recall the dominant lines of sociological
theorizing and research on organizations
up to the mid-1970s.4 In the U.S., research on
organizations as a distinct subfield of study
by sociologists had its roots in efforts
by Robert Merton and his students
478 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
(e.g., Merton, 1947a; Gouldner, 1954; Blau,
1955) to empirically examine key tenets of
functionalist theory. Based on the notion that
organizations could be viewed as societies in
miniature, organizational research was seen as
permitting the kind of comparative study
needed to provide systematic validation for
functionalist arguments (and thus represented
a very appealing alternative to conducting
costly and difficult cross-national studies).
The logic of functionalist reasoning
encouraged examining and explaining organi-
zational structures in terms of benefits (par-
ticularly in terms of efficient functioning) to
organizations. Thus, by the mid-1970s, the
most prominent line of sociological research
on organizations, which had come to be
dubbed as ‘contingency theory,’ reflected a
confluence of this theoretical agenda and the
more pragmatic concerns of a tradition
known as administrative theory (Gulick and
Urwick, 1937; Follett, 1942). Studies in this
tradition typically investigated the way in
which various contingencies, such as size and
technology, affected the relative efficiency
and profitability of variations in structure,
such as complexity, formalization, centraliza-
tion; that is, organizations were generally
assumed to adopt structural arrangements on
the basis of calculations that were aimed at
enhancing efficiency and effectiveness, and
that took into account various contingencies
facing the organization (e.g., Woodward,
1958; Hage and Aiken, 1967; Pugh et al.,
1969; Klatzky, 1970; Blau and Schoenherr,
1971; Pennings, 1973). As Meyer and Rowan
summarize the literature at this point in time:
One of the central problems in organization theory
is to describe the conditions that give rise to
rationalized formal structure. In conventional
theories, rational formal structure is assumed to be
the most effective way to coordinate and control
the complex relationship networks involved in
modern technical or work activities. (1977: 342)
Meyer and Rowan
In advancing an alternative view of the
sources of organizational structure, Meyer
and Rowan drew on Weber’s analysis of
rational-legal authority in modern
economies, and wove this together with
Berger and Luckmann’s (1967) ideas about
institutionalization, processes leading to the
kind of socially-constructed reality depicted
in the earlier quote from Durkheim. They
argued that in modern societies, rules about
how organizations ‘ought’ to operate and the
kinds of structures they ‘should’ have arisen
from a variety of sources. Among these,
Meyer and Rowan discuss the effects of com-
plex relational networks (interconnections
among organizations that facilitate the spread
of ideas and understandings), the collective
organization of the environment (the rise of
powerful states that can pass and enforce
mandates that affect organizations), and the
leadership of local organizations (non-gov-
ernment organizations that have power
and/or legitimacy to promote prescribed
organizational arrangements). Organizations
experience pressure to conform to these rules
in order to maintain their own legitimacy;
thus, formal structure, Meyer and Rowan
suggest, can be viewed as the result of
conformity to such rules or ‘myths.’
This emphasis on ideational and normative
sources of structure offered a very sharp con-
trast to the then-dominant approach to
explaining organizational structure. Note
here that, in contrast to earlier sociological
analyses that provided the underpinning for
their arguments, their concept of ‘institution’
entailed much more circumscribed social
phenomena – particular social rules and
definitions of the appropriate formal struc-
ture of organizations.5
Zucker
Published in the same year, Zucker’s analysis
(1977) provided an elaboration of the phe-
nomenological arguments contained in
Meyer and Rowan, along with empirical
evidence for these from an experimental
study. In contrast to the largely macro-level
focus of the other foundational work, Zucker
 ORGANIZATIONAL INSTITUTIONALISM AND SOCIOLOGY: A REFLECTION
addressed the microfoundations of institu-
tions in some detail and, as she herself says,
such an approach ‘focuses upon institutional-
ization as a process rather than as a state;
upon the cognitive processes involved in the
creation and transmission of institutions’
(Zucker, 1977: 104; see also her post-script
to the re-printing of this study in Powell and
DiMaggio, 1991). Her experiments demon-
strated that when subjects were directed to
think of themselves as being in an organiza-
tional setting (rather than simply engaged in
informal interaction with other participants)
they were much more willing to accept the
judgments of others; moreover, in organiza-
tional settings, such judgments were
more readily transmitted from one set of
subjects to a new set – across generations of
participants.
Consistent with Weber’s arguments about
rational-legal authority, then, her research
indicated that individuals are inclined to view
the behavior of representatives of organiza-
tions as being relatively objective (presum-
ably, as reflecting rational decision criteria
rather than individual, idiosyncratic choices),
and that this increases their propensity to
transmit these behaviors to others as rules,
‘correct’ ways of doing things. Her work
thus provided a crucial link between phe-
nomenologists’ arguments about the impact
of institutions on individual cognitions and
behavior and Weberian arguments about the
nature of authority and normative order in
modern societies. This, in turn, provided a
key base for research by later institutionalists
on the diffusion of particular structures and
practices across sets of organizations
(Tolbert and Zucker, 1983; Palmer, Jennings
and Zhou, 1993; Zhou, 1993; Skinner and
Staiger, 2005).
DiMaggio and Powell
In part, the positive reception that greeted
Meyer and Rowan’s and Zucker’s papers
reflected recognition of the absence of
more normative views of behavior found in
479
dominant lines of organizational research at
the time. By the early 1980s, however, con-
cerns about a perceived overemphasis on
normative imagery in this work and an
implicit lack of agency had begun to build
(Perrow, 1985; Oliver, 1991, 1992; Abbott,
1992; Hirsch and Lounsbury, 1997).
These issues were addressed, to some extent,
in the other two foundational pieces,
published in 1983 by DiMaggio and Powell,
and by Scott and Meyer.
DiMaggio and Powell (1983) also start
from a Weberian view of rationalism as the
major force in industrializing and moderniz-
ing societies, and echo Weber’s idea of such
rationalism becoming an ‘iron cage.’
However, their purpose is to use this as a
springboard for suggesting that the processes
of rationalization and bureaucratization that
drove Weber’s analysis are now standard in
modern society. Like Meyer and Rowan and
Zucker, they argue that the creation of insti-
tutional templates serves to drive processes
of isomorphism, thus resulting in a high level
of structural homogeneity among organiza-
tions. Their specification of different sources
of isomorphism – mimetic, normative and
coercive – elaborated and clarified distinc-
tions pointed to in Meyer and Rowan’s work.
Perhaps more importantly, their notion of
organizational field helped to draw attention
to the array of interacting organizations that
give rise to, shape and re-shape institutional-
ized definitions. They define a field as (1983:
148), ‘those organizations that, in the
aggregate, constitute a recognized area of
institutional life: key suppliers, resource and
product consumers, regulatory agencies and
other organizations that produce the services
or products.’
The notion of field serves to highlight the
variety of actors that may engage in efforts to
affect institutional definitions, and implicitly
suggests a role for active agency, at least
during early phases of field structuration,
while still recognizing the constraining
effects of such definitions. They posit,
‘(O)rganizational actors making rational
decisions construct around themselves an
480 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
environment that constrains their ability to
change further in later years’ (1983: 148).
This conceptualization foreshadows
DiMaggio’s (1988) later work elaborating on
the role of institutional entrepreneurs in
change processes. It also reflects research by
Tolbert and Zucker (1983), who examined
how the political conflict and struggles
among elites and immigrants that contributed
to the early formulation and adoption of civil
service reform laws became an increasingly
irrelevant factor in predicting adoption of the
reform over time. Thus, DiMaggio and
Powell’s analysis provides one avenue for
integrating the agentic, interest-driven
images of social behavior offered by Spencer
and Marx, with the more constrained,
normative conceptions of Durkheim. Like
Weber’s work, their arguments recognize
the validity and necessity of both approaches
for adequate sociological explanations.
Scott and Meyer
Scott and Meyer (1983) elaborate a similar
notion to that of field, namely, societal sector.
They use this term in two ways. The first
usage denotes the set of organizations that
provide similar products and services and
serve the same function, along with resource-
providing and regulatory organizations; this
is clearly akin to DiMaggio and Powell’s
notion of a field. In a second use, though,
sector is used to refer to the kinds of per-
formance criteria that are typically used in
evaluating different sets of organizations. In
particular, they distinguish between technical
sectors, in which performance evaluation is
largely identified with market outcomes, and
institutional sectors, in which performance
evaluation is closely linked to conformity
with institutional rules and regulations and
only indirectly tied to market outcomes. This
latter concept of sector represents a different
way of integrating both agentic and norma-
tive approaches to explaining organizations’
behavior, suggesting that the relevance of
more agentic or normative explanations
depends on the context in which an organiza-
tion operates.
Both of the analyses by DiMaggio and
Powell and Scott and Meyer thus partially
address the core question that Tolbert and
Zucker (1996) later articulated as a key prob-
lematic for the further development of an
institutional approach, reconciling what they
refer to as rational actor models of behavior
with institutional models. They note:
We suggest that these two general models should
be treated not as oppositional but rather as
representing two ends of a continuum of decision-
making processes and behaviors. Thus, a key
problem for theory and research is to specify
the conditions under which behavior is more likely
to resemble one end of this continuum or the
other. In short, what is needed are theories of
when rationality is likely to be more or less
bounded. (176)
Although recent organizational analyses
cast in the institutional tradition have
made some progress in addressing this
issue, a fully satisfactory resolution
still awaits. There are other issues that
remain to be addressed as well, as discussed
below.
ISSUES FOR INSTITUTIONAL THEORY
Comparison of the work of the classic
theoretical forerunners and the initial formu-
lations of institutional theory suggests at
least three issues that merit much more atten-
tion by contemporary institutional theory.
These are:
1. Integrating conceptions of interest-driven behav-
ior (and hence, problems of power and conflict)
with those of bounded rationality and norma-
tively-guided behavior;
2. Setting organizational institutionalism in wider
historical and social contexts in order to
understand more profound processes of social
change;
3. Taking an interpretive approach seriously.
These issues are not, of course, orthogo-
nal; there is clearly overlap among them.
 ORGANIZATIONAL INSTITUTIONALISM AND SOCIOLOGY: A REFLECTION
Incorporating issues of power
and conflict
For both Weber and Marx, the idea of an
institution was inseparable from issues of
power and interest. For both, understanding
the emergence, functioning and change in
institutions entailed understanding the ability
of particular groups in society to ensure that
their interests were served by given arrange-
ments. For both, processes of legitimization
were seen as key to sustaining institutions.
And for both, analyses of patterns of power,
domination, and conflict required in-depth
understanding of the social and historical
context in which they occurred.
Weber argued that the dominance of
bureaucracy as an institution in societies
characterized by rational-legal authority
reflected its substantial advantages over
alternative forms of organization (1947:
337): ‘It is superior to any other form in pre-
cision, in stability, in the stringency of its dis-
cipline, and in its reliability … superior both
in intensive efficiency and in the scope of its
operations, and is formally capable of appli-
cation to all kinds of administrative tasks.’
He also clearly recognized the dark side of
this advantage, however, noting that an
entrenched bureaucracy can serve any inter-
ests, and that those whose interests are served
are likely to become increasingly remote
from the mass of the population. Weber’s
imagery of members of bureaucratic organi-
zations as cogs in a machine acknowledges
that the institution can be a source of alien-
ation, not only in the psychological sense but
in the more Marxian sense: individuals are
separated from the products of their labor,
and thus may enact behaviors that run
directly counter to their material interests.
Marx’s notion of false consciousness cap-
tures the same sort of phenomenon. Although
contemporary institutional theory would
seem a natural point of departure for examin-
ing such behavior, work in this tradition has
given surprisingly little attention to it.
As Friedland and Alford argued that the
social sciences have been in a theoretical
481
retreat from society, so it is possible to argue
that organizational institutionalism has been
in a theoretical retreat from issues of inter-
ests, power, conflict, domination and
exploitation. In part, this reflects both an
unstated functionalist logic in an institution-
alist approach (Kirkpatrick and Ackroyd,
2005), and a general lack of concern with
these issues in North American organiza-
tional theory and sociology in general
(Hinings and Greenwood, 2002). With few
exceptions, there has been a little recognition
of class or collective interests and power in
institutional analyses. Although DiMaggio
(1988) addresses the issues of interests and
power, his analysis reflects more of a concern
for connecting institutional arguments with
the notion of individual agency (more in line
with Spencer’s concerns) than for under-
standing how particular groups attempt to
dominate others. Greenwood and Hinings
(1996) do have a notion of particular occupa-
tional and functional groups having different
material interests and vying for the power to
impose their institutional arrangements on
others. Lawrence et al (2001) propose that
influence, force, discipline and domination
are all mechanisms of institutional change
that are based on how power is used.
However, in these approaches the empha-
sis is on the ways in which power is utilized
to allow institutional change to occur. That is,
it is primarily conceptualized as a factor or
condition that allows change at either the
field or organizational level. And in spite of
the language that Lawrence et al. (2001) use,
their concern is not with the ability of partic-
ular groups to frame institutional arrange-
ments in such a way that their interests are
furthered. What is needed is not only a more
elaborate exploration of the role of institu-
tional forms, organizations and processes as
frameworks and mechanisms in serving
some interests rather than others and, poten-
tially, bolstering the power of some social
and occupational groups rather than others,
but also an examination of the conditions
under which disadvantaged groups will
simply accept or recognize and challenge
482 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
existing institutions. Interestingly, Selznick
(1949) dealt with some of these issues in his
work on Tennessee Valley Authority (TVA),
but this aspect has not been taken up.
One interesting development that could
form the basis for such an approach is the
idea of institutional logics (see Thornton and
Ocasio, Chapter 3 this volume). Marx
emphasized the basis of ideologies in inter-
ests and the consequent way in which such
ideologies control social relations. Thornton
and Ocasio (1999: 804) defined institutional
logics as ‘the socially constructed, historical
patterns of material practices, assumptions,
values, beliefs, and rules by which individu-
als produce and reproduce their material sub-
sistence, organize time and space, and
provide meaning to their social reality.’ And
as they point out in this volume, there is an
inescapably material aspect to institutional
logics. However, the nature of logics as
ideologies and the ways in which they are
related to interests has not been fully
explored.
There is, of course, a stream of sociologi-
cal and management theory that takes institu-
tional frameworks as embodiments of power,
control and domination, namely, critical
theory (Habermas, 1970, 1971, 1974;
Alvesson and Willmott, 1992; Alvesson and
Deetz, 1996). However, this stream of
theorizing has had little or no impact on
organizational institutionalism. More recent
efforts to join research on social movements
with institutional analyses also partially
addresses this issue, but the problem
with much of this work is that it implicitly
takes for granted the ability of actors to
rationally assess the impact of existing
arrangements on their own interests, and
challenge those that fail to serve these
interests (e.g., Schneiberg and Bartley, 2001;
Ingram and Rao, 2004; Rojas, 2006).
Hence, they often rest on a more Spencerian
view of social action, and fail to effectively
address the insights of Durkheim and more
recent phenomenologists concerning the
power of normative orders in constraining
action.
Thus, overall, sociological forerunners
point organizational institutionalists in quite
different directions than have been taken so
far. The central issues that require explo-
ration include the way in which institutional
arrangements serve as instruments of domi-
nation by particular groups and particular
sets of interests rather than others, and better
specification of the conditions under which
they are likely to be subject to challenge by
competing interests. An important part of the
Marxist, Weberian and critical theory argu-
ments about institutions is the way in which
forms move across institutional arenas pre-
cisely because of the way in which they sup-
port particular interests and allow elites to
maintain power (cf. Prichard and Willmott,
1997). As Hinings and Greenwood argued
(2002), organizational theorists have to be
more concerned with the implications of
organizational forms and processes for
power and control, something that should
resonate strongly for organizational institu-
tionalists because institutions are the durable,
change-resistant social structures of society
(Scott, 2001: 49). As Giddens (1984: 24)
puts it, ‘Institutions by definition are the
more enduring features of social life ….
giving “solidity” (to social systems) across
time and space.’
Understanding the relation
between institutions and
social change
As noted, the use of the concept of ‘institu-
tion’ by contemporary organizational
researchers has generally involved a much
more specific and narrower referent than that
of classic sociological theory. Arising as an
alternative approach to explaining formal
organizational structure, the earliest exposi-
tions of institutionalism associated this
concept with very specific elements of struc-
ture among a set of organizations: e.g., affir-
mative action offices, civil service rules,
radio programming formats, ‘poison pill’
policies, and so forth. One result of this
 ORGANIZATIONAL INSTITUTIONALISM AND SOCIOLOGY: A REFLECTION
approach was the deflection of efforts to con-
ceptualize formal structure in terms of
broadly defined dimensions, such as com-
plexity, formalization, and centralization,
efforts that dominated much of organiza-
tional sociology from the 1950s through the
1970s. Indeed, the lack of success by sociol-
ogists in coming up with agreed-upon con-
ceptualizations and operationalizations of
such broad dimensions (e.g., Kimberly,
1976) may have contributed to researchers’
receptivity to an institutional approach.
Another, and perhaps more consequential
outcome, however, has been a neglect of the
sorts of broad patterns of social relations and
social change that were traditionally associ-
ated with analyses of institutions (for notable
exceptions, see the work of John Meyer and
his colleagues). That is, there has been a
distinct shift from efforts to understand ‘big
institutions’ to those that are focused on
(relatively) ‘little institutions.’
The redefinition of the concept of institu-
tion to denote specific elements of structure
may have been driven in part by empiricist
concerns. The broad conception of institution
in sociological theory did not lend itself
easily to operationalization or efforts to
verify theoretical claims, as witnessed by
the still-ongoing debates over how to define
and measure ‘class’ (e.g., Erickson and
Goldthorpe, 1992; Wright, 1997; Weeden
and Grusky, 2005). The redefinition may also
reflect that fact that many (most?) of the cur-
rent proponents of institutionalism work in
business schools, a context that is apt to
encourage a stronger focus on explaining the
behavior of organizations per se and dis-
courage a broader focus on general societal
issues and processes of social change
(Stern and Barley, 1996). One might argue,
as this volume as a whole does, that institu-
tional theory has told us a great deal about
organizational behavior. Indeed, the exis-
tence of a ‘Handbook of Organizational
Institutionalism’ is testament to this.
However, as a consequence of the narrow-
ness of its conception of institutions, institu-
tional theory has offered little in return to the
483
rich heritage of sociological theorizing from
which it draws (cf. Hinings, 1988; Hinings
and Greenwood, 2002).
Most of the theorists that Scott labels fore-
runners were concerned with the broad
sweep of institutions – how society was
constituted through its institutional frame-
work, and how that framework was chang-
ing. Their analyses dealt with creation and
change in dominant institutions, and under-
standing both the historical causes and con-
sequences of such change for both society
and individuals. These issues particularly
resonate in the work of Marx, Durkheim and
Weber. Conceptually, a strong distinguishing
feature of the work of Weber and Marx, espe-
cially, was an emphasis on understanding
institutions and institutional change within
broad historical contexts. They recognized
that they lived in times of large-scale social
change and upheaval, and struggled to under-
stand them. For them, all analysis was
historically located in a particular socio-
economic milieu. While all three were highly
analytical (e.g., the use of ideal types, the
labor theory of value, the nature of anomie),
such constructs were only possible because
of both sweeping and detailed scholarship of
the historical trajectories and embedded
nature of institutions.
It is not that contemporary institutionalists
are oblivious to the historical settings that
frame the diffusion of specific practices (e.g.,
see Tolbert and Zucker, 1983; Sine, Haveman,
and Tolbert, 2005; Haveman, Rao, and
Paruchuri, 2006), but that concern with
explaining organizational behavior, per se,
has often led to a lack of concern with under-
standing and explaining overarching shifts in
society – the increased formalism in all kinds
of organizations (though see Drori, Jang, and
Meyer, 2006), the rise of international gover-
nance organizations in the wake of globaliza-
tion, such as the International Monetary
Fund, the World Bank, and International
Labour Organization, that are not subject to
the authority of any given nation state, the
increasing levels of stratification in many
societies resulting, in part, from changing
484 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
organizational employment policies, and so
forth – and the implications of such shifts for
individuals and social order.
Work focusing on the field level of analy-
sis, which Scott (2006: 16) defines as ‘a set
of interdependent populations of organiza-
tions participating in the same cultural and
social sub-system,’ provides a potential pur-
chase on this issue. This level has indeed
become important in the last 10–15 years in
institutional theory, and is intermediate
between organizations and wider social
systems and forces. However, organizational
institutionalists need to do more work that
locates fields in a societal (and perhaps
international) context. This is particularly
important if organizational theorists and
sociologists of organizations believe, with
Weber, that organizations are the key institu-
tional forms of society. We need to address
questions concerning the ways in which
organizations both shape and are shaped by
the larger historical contexts in which they
are located.
There are, of course, some exemplars that
deal with understanding the relation between
organizational and societal change, in partic-
ular, Zucker (1983), Fligstein (1990), Dobbin
(1994) and in a different way, Orru, Biggart,
and Hamilton (1991). It’s also worth noting
that Friedland and Alford’s cri de coeur con-
cerning the retreat from society is not appli-
cable in Europe, where the development of
institutional theory has been strongly located
in differences between nation states and vari-
eties of capitalism (Whitley, 1992; Morgan,
2001; Djelic and Sahlin Andersson, 2006).
Much of organizational institutionalism,
though, needs to find its way back to these
issues of historical and societal significance.
Taking an interpretive approach
seriously
The final set of problems that we see as need-
ing more attention by organizational institu-
tionalists involves gaining a better
understanding of the kinds of issues that
underpinned Durkheim’s analysis – how nor-
mative orders arise, are maintained and
change. That is, institutionalism needs to
explore in more detail the conditions under
which individuals are likely to raise and
accept challenges to existing institutional
orders, or to reject such challenges. This
problem also, clearly, relates to Marx’s
notion of false consciousness, and the ques-
tion of how Klasse an sich may become
Klasse feur sich.
As noted, institutionalists have addressed
these concerns to some extent, particularly
by drawing on work by phenomenologists,
such as Schutz, Berger and Luckmann,
and by more recent scholars, such as
Bourdieu and Giddens. Giddens’ notion of
the ‘duality of structure,’ suggesting that
while structures constrain social action they
are also created and modified by knowledge-
able actors, has served as an important
springboard for much discussion of the
processes of institutional change (1976,
1979). For the most part, however, analyses
that have drawn on the ideas of these schol-
ars have remained theoretical (see Sewell,
1992 for a particularly cogent theoretical
synthesis). The great majority of empirical
studies conducted under the banner of insti-
tutionalism have involved large-scale, quan-
titative studies examining the adoption or,
less frequently, the abandonment of particu-
lar organizational practices or arrangements.
While these studies are often premised on
theoretical assumptions about cognitive and
interactive processes that underpin these
institutional processes (DiMaggio, 1997;
Oliver, 1991; Tolbert and Zucker, 1996;
Barley and Tolbert, 1997; Greenwood,
Suddaby, and Hinings, 2002), the
assumptions themselves have seldom been
subject to empirical verification by
researchers.6
One approach to this entails more inten-
sive use of data gathered through observa-
tional, interview and analysis of historical
documents derived from first-hand partici-
pants involved in change or potential change
processes. This is in line with Silverman’s
 ORGANIZATIONAL INSTITUTIONALISM AND SOCIOLOGY: A REFLECTION
(1970) older agenda for organizational soci-
ology, centering on a critique of reified and
abstracted empiricism and arguing for its
replacement with an action frame of refer-
ence. Silverman was particularly concerned
with shifting attention to what organizational
actors actually do through the process of
interpretation to construct meanings. In
terms of method, this approach promotes the
use of case studies, focuses on actual behav-
iors, privileges discourse and emphasizes
metaphor. In a similar vein, Barley and
Tolbert have sought to lay out a research
agenda, specifically within the framework of
institutional theory, which addresses issues
of action and institutional change, and which
emphasizes the identification and analysis of
scripts centered on behavior as a key ele-
ment. Drawing on Giddens’ concepts of
structuration, they make a plea for ‘a system-
atic exploration of the relative important of
behavioral and interpretive phenomena in
the institutional process, and on the basis of
such exploration, the fashioning of a set of
methods that are sensitive to and systematic
about documenting both cultural and struc-
tural dynamics’ (Barley and Tolbert, 1997:
113). One example of empirical work in this
vein is Barley’s (1986) classic study of the
adoption of new technology by radiology
departments, which analyzes changes pro-
duced in scripts, routines, and processes of
structuration (see Scott’s 2001 of this study).
An alternative approach involves linking
discourse theory and concepts of framing
with institutional theory (Phillips, Lawrence,
and Hardy, 2004; Chreim, 2006). As with the
attempt to use structuration theory, the con-
cern here is with the processes of institution-
alization and actors as active agents
interpreting and establishing meanings in
those processes. Phillips et al. (2004) develop
a discursive model of institutionalization that
highlights the relationships among texts, dis-
course, institutions, and action. They argue
that language is fundamental to institution-
alization: institutionalization occurs as actors
interact and come to accept shared definitions of
reality, and it is through linguistic processes that
485
definitions of reality are constituted (Berger and
Luckmann, 1966). Despite this connection
between institutions and language, most institu-
tional theory has been dominated by realist inves-
tigations in which the examination of
organizational practices has been disconnected
from the discursive practices that constitute them
(Phillips et al., 2004: 636).
One of the few examples of an empirical
study using a discourse analytic approach to
study institutional phenomena is represented
in Zbaracki’s (1998) thoughtful and provoca-
tive analysis of the adoption and implemen-
tation of total quality management practices
by organizations.
The essential point about an interpretative
approach is that it takes the actor, subjectivity,
meanings, and reflexivity seriously. In so
doing it opens up the black box of institution-
alization both in stability and change. And it
does it from a theoretical and methodological
standpoint that is less than prevalent in orga-
nizational institutionalism. While we have
many provocative suggestions as to factors
that enable actors to question and alter extant
institutions (see Sewell, 1992), we have little
empirical knowledge of the conditions under
which those factors are most likely to come
into play. Thus, many questions remain
answered, including those such as: What is
required for a general reorientation of shared
cognitions (e.g., under what conditions might
a widespread rejection of tenure systems in
academia occur)? What causes breakdowns in
institutionalization processes, once these are
set in motion (e.g., why did some developed
countries resist signing the Kyoto protocols
after many of their allies and partners had
done so)? And why do institutions that clearly
disadvantage some groups continue to be
accepted by members of those groups (e.g.,
why did some freed slaves in the antebellum
U.S. become slaveholders themselves)?
CONCLUDING COMMENTS
We have attempted to revisit the origins of
institutional theory and thereby ask questions
486 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
concerning in what ways the earlier insights
may have been lost in more contemporary
studies.
Contemporary institutional theory reflects
the core understandings and assumptions that
provided touchstones for classic sociological
theorizing, as well as the analytic dilemmas
that characterize the combined works of its
forerunners. By tracing its linkages to the
ideas and arguments of the preeminent social
theorists indicated by Scott, we have
intended to help explain both the attraction of
this approach to organizational analysis for
many researchers, as well as the difficult and
ongoing debates that have sometimes fueled
a general sense of uneasiness about its future.
We have argued that, in particular, current
institutionalism is characterized by a core
tension that can be traced to the roots of soci-
ology, understanding social action as a prod-
uct of interest-motivated, conscious choices
by actors or as a product of normatively-
constrained, habitualized responses. In line
with the observations of Tolbert and Zucker
(1996) and others, we do not see these as
antithetical models, but rather as poles on a
continuum: Under different conditions,
actors’ decisions and behaviors are likely to
be closer to one or the other end of the spec-
trum. In our view, the key problematic facing
sociologists (and anyone who seeks to extend
an institutionalist perspective) is specifying
what these conditions are, and explaining the
connection between particular conditions
and individuals’ receptivity to cognitive
reorientation and norm-breaking action.
As argued above, we believe that part of
this effort will require more empirical
analyses that use interpretive frameworks to
explore institutional phenomena. That is, we
need a much more thorough understanding of
institutions as manifested in individual
perceptions and decisions if we are to fully
grasp the duality of structures (using
Giddens’ term). It is commonly argued, for
example, that resource constraints that hinder
the enactment of institutionally-based behav-
iors are often a critical factor in bringing
about institutional change (e.g., Leblebici,
Salancik, Copay, and King, 1991; Sewell,
1992; Barley and Tolbert, 1997). But we
have little insight into how individuals trans-
late resource problems into a critical
consciousness, or into what determines
whether such constraints will lead merely to
minor adaptations or to complete rejection of
institutional patterns. Gaining a better
understanding of such issues would, we
speculate, ultimately provide the foundation
for a better understanding of the sorts of
broad changes in societies and social orders
that motivated the sociological analyses that
serve as the forerunners of contemporary
institutionalism, and could also help
illuminate the way in which existing rela-
tions of power are likely to be subject to chal-
lenge. Drawing a link between specific
micro-level interactional processes and
particular instances of broad social change is
a treacherous business, one that has some
resemblance to exploring the butterfly effect
(Bradbury, 1953), but a general understand-
ing of micro-level phenomena would, we
believe, allow a fuller understanding of how
individual processes and societal level
outcomes may be generally linked.
In addition, a central motif of the social
theorizing that institutional theory draws
upon was of the processes of social change.
While it is necessary to conceptualize institu-
tionalization as a state, there has been too
much emphasis on this rather than on institu-
tionalization as a process, understanding how
those processes occur over time, and
what the central drivers of institutional
change are. These kinds of questions were at
the heart of the theorizing of Durkheim,
Marx and Weber (and are also exempli-
fied in the work of Meyer and his col-
leagues. They are much less evident in the
work of contemporary organizational
institutionalists.
We believe that following up on these
themes in our research agendas would
allow modern institutionalism to make
a significant contribution to the
rich sociological heritage on which it has
drawn.
 ORGANIZATIONAL INSTITUTIONALISM AND SOCIOLOGY: A REFLECTION
NOTES
1 This lack of attention is summed up by Parsons’
plaintive query, posed in the opening of The
Structure of Social Action, less than 40 years after
Spencer’s death (1937: 1): ‘Who now reads
Spencer?’ Recent theorists (e.g., Andreski, 1973;
Turner and Beeghley, 1981) suggest that the general
neglect of useful theoretical insights provided by
Spencer stems from antipathy toward his embrace of
now-discounted ideas, such as Social Darwinism.
2 Interestingly, some empirical evidence of
Durkheim’s notion of collective consciousness can be
adduced from recent work by psychologists on the
formation and behavior of in-groups (Tajfel and
Turner, 1979). In a provocative analysis, Zucker
(1986) offers a reversal of Durkheim’s arguments,
noting that institutions can contribute to the forma-
tion of trust and solidarity.
3 very similar argument is advanced by Merton
(1947b), who focuses on the relative balance of func-
tions and dysfunctions associated with existing struc-
tures as a source of social change. Merton does not
invoke notions of objectively-defined classes, how-
ever, and though he recognizes that it is important to
consider for whom (or for which groups) a given
structure is functional or dysfunctional, how to factor
that consideration into assessments of the likelihood
of change is left unanswered.
4 For a slightly more expanded account of the ori-
gins of an institutional approach in organizational
analyses, see Tolbert and Zucker, 1996.
5 A slightly different, but also relatively narrow
notion of institution is found in Selznick’s work on
leadership (1957: 16–17). One of the functions of a
leader, Selznick argues, is to infuse an organization
with social value that goes beyond the achievement
of its technical goals; this contributes to its
adaptability and long-term survival. Thus, Selznick’s
use here identifies ‘institution’ with a type of
organization.
6 Some relevant empirical work that relates to
this has been provided over the last 20 years by psy-
chologists in research on processes of cognition for-
mation and change, but the use of such research by
sociologists or others drawing on institutional theory,
even as evidential support for underlying assump-
tions, is very rare (see DiMaggio, 1997; Clemens and
Cooke, 1999).
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Coalface Institutionalism
Famous personages and also periods in the history
… may be reassessed, some being demoted and
others raised up or even rediscovered … Some are
found worthless, stale; others provide stimulating
ideas and even technology which can be built on
… their ideas and work are more ‘relevant’ – not
merely more useful or suggestive – than that of
many contemporaries … No matter that the
ancestors might be turning uncomfortably in their
graves if they knew how their lives and works were
reinterpreted and selectively used. (Strauss,
1982: 179)
INSTITUTIONALISM, SOCIAL
CONSTRUCTION AND
ETHNOMETHODOLOGY
Neo-institutionalism appeared in the late
1970s with the goal of challenging rational
theories of organizing that had ruled organiza-
tion studies since the 1960s (Zucker 1977,
Meyer and Rowan 1977, DiMaggio and
Powell 1983). It also arrived just in time to
counterbalance newly emerging transaction
cost and ecological theories of organizational
form (Williamson 1975, Hannan and Freeman
1977). Whereas transaction cost theory
breathed new life into rational views of organ-
izing by building on the calculus of a make or
buy decision, the ecologists professed that
20
Stephen R. Barley
human agency of any kind was largely
irrelevant, if not illusory. This left the neo-
institutionalists to reinforce the sociological
line in organization studies. In what are
widely acknowledged as seminal papers that
staked out neo-institutionalism’s stance,
Zucker (1977), Meyer and Rowan (1977), and
DiMaggio and Powell (1983) argued that
organizations not only act, but that they often
do so for cultural, interpretative, and symbolic
reasons and that these actions matter for an
organization’s fate. For ethnographers of work
and organizations, many of whom still worked
in the spirit of industrial sociology, the neo-
institutionalists seemed like kin. Here, finally,
were bona fide organizational theorists who
dared to stake their macro-theories on a
micro-sociology.1
The institutionalists’ micro-sociologies of
choice were phenomenological construc-
tivism and ethnomethodology. Zucker made
the most use of both (Zucker 1977, 1987;
Tolbert and Zucker 1996). She combined
Berger and Luckmann’s (1967) concepts of
typification, reification, and objectivation
with Garfinkel’s (1967) notion of accounts to
argue that institutions are best treated as
taken-for-granted understandings: 2
Institutionalized acts then, must be perceived as
both objective and exterior. Acts are objective
492 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
when they are potentially repeatable by other
actors without changing the common understand-
ing of the act, while acts are exterior when the
subjective understanding of acts is reconstructed
as intersubjective … so that the acts are seen as
part of the external world (see Berger and
Luckmann, 1967 on ‘reification’ and ‘objectiva-
tion’) … When acts have ready-made accounts
they are institutionalized; that is both
objective and exterior. (Zucker 1977: 728, italics in
original)
Although less expansively, Meyer and
Rowan (1977) made nearly identical use of
the same micro-sociologies. Crediting
Berger and Luckmann (1977: 341), they
wrote: ‘Institutionalized rules are classifica-
tions built into society as reciprocated typifi-
cations or interpretations.’ Later, citing Scott
and Lyman (1968: 349), they connected
institutions to the ethnomethodologi-
cal notion of accounts: ‘The incorporation of
institutionalized elements provides an
account of its activities that protects the
organization from having its context
questioned.’
Published six years later, DiMaggio and
Powell’s (1983) canonical article contained
no mention of either constructivism or eth-
nomethodology, except for passing reference
to a paper by Aaron Cicourel (1970). But in
the introduction to their influential book, The
New Institutionalism in Organizational
Analysis, DiMaggio and Powell (1991:
19–22) highlighted both micro-sociologies.
They concluded: ‘Ethnomethodology and
phenomenology together provide the new
institutionalism with a micro-sociology of
considerable power’ (1991: 21). Since these
original manifestos, however, institutional-
ists have devoted little attention to eth-
nomethodology, to social construction, or for
that matter, to micro-sociology of any kind.
As institutionalism spread, its micro-social
concerns disappeared into the background.
In retrospect, the disappearance is unsur-
prising. Ethnomethodology was from the
start an odd choice for linking organizations
to situated action and cognition. With a few
notable exceptions (Bittner 1965; Silverman
1971; Cicourel 1967), ethnomethodologists
had little to say about organizations.3
They certainly spoke of institutions, but their
institutions were of a different order than
those that preoccupied institutionalists.
Ethnomethodologists have usually focused
on taken-for-granted understandings that are
widely shared by members of a culture or
subculture: for example, how to do gender
(Garfinkel 1967), how to do power
(Grimshaw 1981), how to do being a doctor
(Emerson 1970) or how to take turns in a
conversation (Sachs et al. 1974). In fact, for
ethnomethodologists, interpretive procedures
were the ultimate institutions. By interpretive
procedures ethnomethodologists meant deep,
taken-for-granted rules necessary for engag-
ing in everyday interaction in precisely the
same way that grammars are the deep rules
for everyday speech (Cicourel 1970, 1972,
1981). Among the interpretive procedures
that interested ethnomethodologists were: a
reciprocity of perspectives (the assumption
that others see the same world
I see), indexicality (the assumption that to
make sense of what is being said or done
I need to take the immediate context into
account) and a retrospective-prospective
sense of occurrence (the assumption that
others will eventually do or say something
that will clarify what they have done or said
so far). Clearly, these taken-for-granteds are
of a different order than civil service reform
(Tolbert and Zucker 1983), internal labor
markets (Dobbin et al. 1993), or changing
forms of corporate control (Fligstein 1993).
The latter are components of social or politi-
cal systems that operate at much higher level
of analysis than the phenomena typically of
concern to ethnomethodologists.
Furthermore, ethnomethodology is prima-
rily a cognitive rather than a behavioral
or political sociology (Cicourel 1974).
In ethnomethodology, as in institutional
theory, sense-making trumps vested action.
Ethnomethdology’s cognitive perspective, as
well as Berger and Luckmann’s notions of
reification, objectivation, and sedimentation,
make it easier to view institutions as stable
constraints rather than as shifting resources.
 COALFACE INSTITUTIONALISM
In fact, as Heritage notes (1993), eth-
nomethodologists have written more about
the replication of social order than about its
change. Paul DiMaggio (1988: 10) acknowl-
edged a similar proclivity in institutional
theory two decades ago:
If the focus of institutional theory on norms, taken-
for-granted assumptions, and cognitive and coor-
dinative limitations represent substantive reasons
for the neglect (relative to other theoretical tradi-
tions) of interests, part of this neglect is implicit not
in the logic of institutional arguments but in the
rhetoric that institutional theorists have used to
advance them. The ‘iron cage’ is one such phrase,
with its implicit portrayal of humans as powerless
…. Similar are assertions that institutionalized
organizations ‘take on a life of their own’ …
Presumably if an organization ‘takes on a life of its
own’ one need not attend to individual or group
motives to understand behavior … The most wide-
spread rhetorical, as opposed to analytic, dis-
missals of agency … occur in the chronic use of
passive constructions and, where nouns are used
as the subjects of active verbs, in the selection of
subjects so broad of reference as to be substan-
tively empty … [T]he locutions … [that institution-
alists use] systematically de-emphasize human
agency. Institutional myths ‘are highly institutional-
ized,’ and some structural elements are …’soci-
etally legitimated.’ Another approach … would be
to ask, ‘Who has institutionalized the myths (and
why)?’ and ‘Who has the power to “legitimate” a
structural element?’
Ironically, institutionalism might have
avoided these issues and others to which they
have subsequently been forced to attend had
they looked to a different micro-sociology
for inspiration: Chicago School sociology
as practiced by Everett C. Hughes and his
students.4
INTERACTIONISM: THE ROAD
NOT TAKEN
Chicago School sociologists, especially
Hughes, saw their agenda as the study of
institutions and institutionalized behavior.5
George Herbert Mead, whose work strongly
influenced Chicago sociology, had defined
493
society as a ‘body of institutions’ (Athens
2005: 305). Hughes, in turn, equated sociol-
ogy with the study of institutions. ‘Sociology
is that one of the social sciences,’ he wrote,
‘Which is especially and peculiarly, by intent
and not by accident, a science of social insti-
tutions’ (1942: 15). Zucker (1977: 726)
recognized Hughes’ relevance for the neo-
institutionalists’ agenda and opened her
influential paper by citing one of Hughes’
quip-like definitions: ‘The only idea
common to all usages of the term ‘institu-
tion’ is that of some sort of establishment of
relative permanence of a distinctly social
sort’ (Hughes 1936: 180). But, she subse-
quently made little use the Chicagoans.
Meyer and Rowan (1977) made even less:
their paper contains no mention of Hughes
and only passing references to Dalton (1950)
and Goffman (1967), who studied with
Hughes at Chicago. DiMaggio and Powell
(1983) referenced no Chicago School sociol-
ogists at all.
Substantial acknowledgement of Hughes’
contribution to the study of institutions
awaited the publication of Richard Scott’s
(1995) Institutions and Organizations. Early
in his treatise, Scott (1995: 8) credited
Hughes with being an early institutionalist,
noted that Hughes was particularly interested
in the relationship between individuals and
institutions and credited the Chicagoans for
carrying institutionalism ‘forward in an unin-
terrupted fashion’ in occupational
sociology (1995: 9). Scott scolded organiza-
tional sociologists for not having done the
same, but then said nothing more about the
Chicagoans’ contributions. In fact, later in
the book, when mapping levels of analysis to
bodies of theory and research on institutions
Scott (1995: 59), presented ethnomethodol-
ogy as the only institutional sociology that
operates at the level of the organization and
below.
Scott may have skipped the Chicago sociol-
ogists, not only because they studied occupa-
tions, but also because he classified them as
symbolic interactionists who saw meaning
as ‘internalized and subjective’ rather than as
494 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
objective and exterior (1995: 42).6 If by sym-
bolic interactionists Scott had Herbert Blumer
(1962) and his students in mind, then his
charge of subjectivism is warranted. As Athens
(2005: 307–208) points out, Blumer down-
played Mead’s notion of institutionalized
(exterior) meaning (what Mead called,
‘common maxims’), because he apparently
believed that the notion of an institution was
less relevant for ‘modern, mass societies’ than
it had been in traditional societies.7 However,
the charge of subjectivism cannot be so easily
leveled against Hughes, Anselm Strauss
(Strauss, Schatzman, Bucher et al. 1964;
Strauss 1968, 1978a), Howard Becker (1952,
1953, 1963, 1982) and others who collabo-
rated or studied with Hughes. Hughes and
Blumer were both students of Robert Park
and Ernest Burgess (1921), both were influ-
enced by Mead (1934) and were later col-
leagues on the faculty at Chicago, but
Hughes’ work differed significantly from
Blumer’s precisely because institutions were
front and center in Hughes’ image of soci-
ety.8 Hughes wrote about real estate boards,
professional associations, medical schools,
and hospitals among other settings. Perhaps
most importantly, he studied the processes
by which occupations become professions:
Processes which, for Hughes, entailed the
construction of precisely the sort of institu-
tions that neo-institutionalists study.
Perhaps it is because the institutionalists
overlooked the Chicagoans that they have
generally turned to social psychology when
they need to link meaning to social structure
and explain how institutional rules are inter-
preted and negotiated (rather than imposed or
coerced):
By contrast [to institutionalists], social psycholo-
gists are more likely to emphasize the interactive
and negotiated nature of those choices.
Constitutive rules need not simply be externally
imposed on actors. Weick (1979), for example,
emphasizes that understandings and scripts
emerge out of actions as well as guide them and
that collective symbols are as likely to be used to
justify past behaviors as to guide current ones.
These newer versions of role and identity theory
emphasize that individuals play an active part,
using existing rules and social resources to con-
struct a social identity with some consistency
across varying situations … A cognitive conception
of institutions stresses the central role played by
the socially mediated construction of a common
framework of meaning. (Scott 1995: 45)
Hughes and his students spent half a cen-
tury developing and refining an understand-
ing of how actors negotiate understandings,
rules, roles, and meaning, albeit from a
decidedly sociological and institutional
perspective.
I suspect, however, that institutionalists
overlooked the Chicagoans for the same
reason that other sociologists have done so:
Hughes and his students are widely thought to
have developed no theory. The perception of
the Chicagoans as theory-less arises, in part,
because Hughes and his students eschewed
top-down theory in favor of amassing data to
generate what Glaser and Strauss (1967)
would eventually call ‘grounded theory.’ Fine
(1991: 165) makes precisely this point when
discussing how interactionists have dealt with
institutional constraints. ‘Any approach to
social order,’ Fine wrote, ‘Must recognize that
although actors themselves affect how they
define their world, others – corporate, collec-
tive, imaginary, or metaphoric – considerably
influence their choices. Our ethnographies,
grounded in institutional realities and individ-
ual recognitions of these realities, demonstrate
this, but our theory lags behind.’ In other
words, institutions served Hughes and his stu-
dents as an ever-present backdrop for their
field studies. The concept of institutions is
tightly woven into their writings. However,
they had little need for an explicit theory of
institutions because they did not have institu-
tionalism’s agenda of developing an alterna-
tive to rationalism.9
Nevertheless, to say that Chicago School
sociologists built no explicit theory is not to
say that they had no perspective at all. As
Rock (1979: 83) noted, the theoretical loose-
ness that scholars find troubling about the
Chicagoans was less a matter of muddled
minds than a practiced guard against prema-
ture generalization. Hughes and his students
 COALFACE INSTITUTIONALISM
aimed their investigations at bounded ‘social
worlds’ (Shibutani 1955; Strauss 1978b).
Their guiding notion was that valid theoreti-
cal concepts could only emerge by compar-
ing the particulars of a variety of settings
(Glaser and Strauss 1967). If a construct was
to be relevant for a range of cases, its reach
had to be demonstrated empirically. As a
consequence, the picture of how the
Chicagoans understood institutions is scat-
tered across forty years of research.
In recent years, scholars have begun to
acknowledge the relevance of interactionist
sociology for institutionalism (Basu,
Dirsmith, and Gupta 1999; Fligstein 2001;
Lounsbury and Kaghan 2001; Hallett and
Ventresca 2006).10 My goal is go further and
explain in detail how Hughes and his students
understood institutions and institutionaliza-
tion. As we shall see, their ideas are not only
consistent with neo-institutionalism, but their
perspective offers a micro-sociology that
treats institutions as constraints while empha-
sizing the role that human agency and vested
interests play in creating, maintaining and
changing institutions. I begin by documenting
how the Chicagoans defined institutions and
then explicate Anselm Strauss’s notions of
negotiated orders and social worlds, concepts
that capture, respectively, the institutionalists’
image of institutions as social processes and
structures. The discussion subsequently turns
to two issues that currently concern institu-
tionalists and about which the interactionists
had much to say: legitimation and the nature
of institutional complexes. My agenda is to
suggest how researchers might proceed if
they assume, as did the Chicagoans, that
action always occurs within the constraints of
an institutional matrix that humans wittingly
or unwittingly create, maintain, and alter.
INSTITUTION IN THE CHICAGO
TRADITION
‘Institution’ and its various semantic deriva-
tives peppered the writings of the Chicagoans,
495
but other than Hughes, few said directly what
they meant by the term. The same is true of
the entire constellation of concepts (career,
role, identity, etc.) with which the interac-
tionists routinely worked (Barley 1989).
Scholars must, therefore, infer what the
Chicagoans had in mind by examining the
context in which the terms appear. In general,
Hughes and his students used ‘institution’ in
three ways. The first was to denote types or
classes of organizations: hospitals, schools,
labor unions, firms, and so on. The second
was closer to how Mead (1934) and Merton
(1957) employed the term: broad sectors or
domains of society such as the family, sci-
ence, religion and economy. The third usage,
which is more frequent and more interesting,
is harder to specify, although it underwrites
the other two. To grasp this more diffuse
notion of institution, it is useful to turn to
passages drawn from a number of texts.
Hughes begins ‘The Study of Institutions’
by inventorying, in his down-home, discur-
sive way, concrete examples of institutions of
different ‘orders.’
A large portion of the people in our society live
together in families º Likewise, people go to work
in factories; they study, teach and play in schools
º If they are residents of Latin American villages,
they will engage once a year in a great fiesta: if
they live in the rural Middle West, they might pos-
sibly be annually mobilized by a county fair. In all
these instances people are mobilized to take their
places – important or minor, casual or regular, vol-
untary or involuntary – in a collective enterprise
carried on in a somewhat established and
expected way. The things I have named – and
many others as well – have been called institutions.
Some of the other things, which have been called
by the same name, are of quite different orders. It
is not my purpose to explore the limits of a con-
cept. (Hughes 1942: 307, italics added)
Hughes then goes on to say that students
of institutions should concern themselves
with two phenomena: action and social
forms, the first of which occurs ‘within’ the
latter. Given this, he cautions that trying to
decide whether something is or is not an
institution is a waste of time:
I rest the case by saying that I conceive of the study
of institutions to be part of the study of society in
496 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
action. The center of the field lies where the action
takes place within forms which are somewhat
firmly established. The student of institutions will,
however, be interested also in seeing how social
forms become established, how they bend and
yield under pressure, how they give place to new,
and what functions they perform. He will, if his
interest is in the structure and functioning of soci-
ety, be only incidentally concerned to answer cate-
gorically the question whether the newspaper, the
beer parlor, the Republican Party or property is an
institution at a given moment. (Hughes 1942: 307,
italics added)
These passages contain four ideas key to
the interactionists’ concept of an institution.
First, institutions were ‘social forms,’ a term
drawn directly from Simmel (1964).11 For
Simmel, as for Hughes, a social form was a
pattern both of and for social action. It was
exterior to those who participated in it and
independent of the particulars of their behav-
ior. Form is a structural concept in the sense
that genre, script, role, template, and gram-
mar are structures. For Simmel, forms were
the building blocks of society. Thus, it is fair
to say that like Berger and Luckmann,
Hughes saw institutions as constructions that
had become objectified and exteriorized,
although perhaps less reified.
Second, when Hughes spoke of institu-
tions of different ‘orders,’ he implied that
institutions vary in their scope or range of
application. Some institutions cover the
actions of large portions of society (a form of
family or notions of property), while others
are relatively local (a fiesta or a county fair).
Third, institutions are ‘collective enter-
prises,’ in the sense that they are jointly pro-
duced through ongoing action and
interaction. Finally, institutionalized actions
and interactions are to some degree scripted;
people ‘take their places’ in the sense that
they play roles in a ‘somewhat established or
expected way.’ Without such consistency,
institutions could not exist.
In a paper written twenty years later,
Hughes (1962/71) was more explicit about
what constituted a social form. Much like
Mead, who claimed that behavior was insti-
tutionalized when people behaved according
to ‘common maxims,’ Hughes pointed to
conventions.
Since a common feature of definitions of institu-
tions is that they are clusters of conventions, the
obvious things to put into a list are those phenom-
ena that are beyond dispute conventional, the
things that have a place in the more established
public statements of how we do things (strongly
tinged with the notion that these are the right way
to do things). But if we close our lists there, we
miss the main and more fascinating part of the
sociologist’s work, which is to understand how
social values and collective arrangements are made
and unmade: how things arise and how they
change. To make progress with our job, we need
to give full and comparative attention to the not-
yets, the didn’t quite-make-its, the not quite
respectable, the unremarked and the openly ‘anti’
goings-on in our society. (1962/71: 52, italics
added)
This passage points to three additional
attributes of Hughes’ notion of an institution.
First, like the ethnomethodologists, Hughes
viewed institutions as taken-for-granted cul-
tural understandings and practices. But,
unlike the ethnomethodologists, he implied
that taken-for-granteds could be articulated
as ‘how we do things’ and that they had
moral force. In other words, institutions carry
some notion of ‘ought.’ As a result, Hughes
attributed behavioral status to institutions
without denying that they also had a
cognitive element. For interactionists the
social, cognitive and behavioral were insepa-
rable. Second, Hughes claimed that conven-
tions ‘cluster,’ they occur in complexes. That
institutions co-occur or intersect to form a
social fabric is an important and recurring
image in interactionist sociology. Finally, as
did most Chicagoans, Hughes thought it
important to study institutions in process. For
the interactionists, institutions were not
fixed: They morphed as people created,
attempted to change, and sometimes elimi-
nated them.
By combining these various attributes, we
can synthesize an approximate definition
of what Hughes meant by an institution.
Institutions are social forms or templates
composed of clusters of conventions
that script behavior to varying degrees in
 COALFACE INSTITUTIONALISM
given contexts. Institutions are socially
constructed and are subsequently maintained
or changed by people who act and interact
with each other. For the Chicagoans, then,
an institution was an abstract and flexible
heuristic applicable at a variety of levels of
analysis. Thus, for example, Goffman (1983)
could, in a single paper, employ the term to
talk about the social meaning of acquain-
tanceship as well as the form of a service
encounter (practices that address customers’
expectations that they be treated equitably,
equally and with courtesy):
Take for example (in our own society) acquain-
tanceship, or, better still, ‘knowership.’ This is a
critical institution from the perspective of how we
deal with individuals in our immediate, or in our
telephonic, presence, a key factor in the organiza-
tion of social contacts. What is involved is the right
and obligation mutually to accept and openly to
acknowledge individual identification on all initial
occasions of incidentally produced proximity (p.13)
… I have suggested in schematic terms elements
of the structure of service transactions that can be
taken as institutionalized and official, such that
ordinarily when they are seen to apply in a
particular service setting, those present feel that
nothing marked or unacceptable or out of the
ordinary has occurred by way of substance or cer-
emony (1983: 15)
Although Goffman’s renderings resembled
an ethnomethodologist’s take on institutions
(see especially Goffman, 1981), other
Chicagoans spoke of institutions at levels of
analysis that have preoccupied the neo-insti-
tutionalists. Consider, for example, Strauss
and Schatzman’s comments on forms of psy-
chiatric hospitals:
Socio-cultural changes in American life account
both for much of what is claimed that the mentally
ill need and for the kinds of institutions and prac-
tices being fashioned for them. Institutions, like
people, have historical and social loci …. For exam-
ple, Americans may be developing certain forms of
institutional practice, not so much because they
are designed for better psychiatric treatment but
because they … meet the requirements of some
special public … Design for psychiatric treatment
may be a rationalization of ideological sentiment
º for behind mental institutions are social and
philosophical trends, which give rise to ideas about
appropriate institutional forms. … During the
latter half of the nineteenth century, the United
497
States developed the state mental hospital. We are
all familiar with this form of hospital … Today they
are widely regarded as medieval, cruel, or totally
unsuitable for the treatment of the mentally ill. Yet
they were once regarded as suitable … [they]
siphoned off many of the poor, the indigent, and
the unassimilated immigrants, and effectively hid
them from public view and concern. They relieved
the cities and states of special welfare and protec-
tion problems and saved whole families from the
threat of downward mobility. All this they did with
a minimum of cost … We would say that this insti-
tutional form was appropriate simply because at
that time it reflected the needs, ideas, and charac-
ter of American life. Sociologically, it fit. Today it no
longer fits. Now we are developing new institu-
tional forms and practices appropriate to the
needs, ideas, and character of American life
today – and not necessarily appropriate to the
needs of the mentally ill. (Schatzman and Strauss
1966: 12, italics added)
This passage points to two additional
attributes of institutions, as Chicagoans
understood them. First, institutions are his-
torically situated and sociologists would do
well to approach them with a long view.
Second, institutions are tied to ideologies
championed by specific segments of society
that lend the institution legitimacy. As ide-
ologies change, legitimacy will change and,
hence, so will the institution.
In short, the Chicagoan’s image of institu-
tions encompasses much of neo-institutional-
ism’s more cognitive view. Like
institutionalists, the Chicagoans argued that
institutions were typifications – taken-
for-granted ways of acting, doing, seeing and
thinking. As Fine put it:
Learning to act appropriately requires understand-
ing the ‘type’ of situation faced and knowing what
behaviors fit … Further, [situations] are
perceived as being controlled by and constitutive
of organizations, groups, institutions, and societies
… Our reading of situations involves creating
typifications of macro-structures that serve as the
basis for addressing future interactions. (1991:
165)
Like institutionalists, Hughes and his stu-
dents also understood that perceptions of
legitimacy were crucial to the emergence and
maintenance of institutions and that legitima-
tion was integrally tied to ideologies whose
498 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
rhetorics offered justificatory accounts.
Finally, although ‘social form’ connotes a
broader concept of social structure than
that which most institutionalists employ, it
easily encompasses the institutionalists’
concern with types of organizations and
organizational structures. Indeed, interac-
tionists routinely used ‘institution’ to
refer to organizational forms (Schatzman
and Strauss 1966; Strauss et al. 1964; Bucher
and Stelling 1977; McCallion and Maines
2002).
At the same time, the Chicagoans’ view of
institutions differed from the institutional-
ists’ in theoretically and empirically impor-
tant ways. First, they saw institutions as
processes. Institutions not only constrained
human action, human action, in turn, created,
maintained, and changed institutions. Said
differently, institutions were both a product
of and resources for interaction and negotia-
tion in everyday life. Second, institutions
occurred in clusters and these clusters
defined the context for action in the social
worlds they covered. Institutions were, there-
fore, integral to the segmentation of society.
To see how these ideas might benefit contem-
porary institutionalists requires turning from
Hughes to Anselm Strauss’s work on
negotiated order (Strauss 1978a) and social
worlds (Strauss 1978b, 1982, 1984).12 The
former amounts to an action-oriented take on
institutions and institutionalization, while the
latter provides a way of conceptualizing,
investigating, and analyzing institutional
clusters.
NEGOTIATED ORDERS
Despite Berger and Luckmann’s interest in
human agency and Garfinkel’s preoccupation
with practice, the institutionalists who
invoked them paid little attention to agency
and practice. Sometimes, this seemed pur-
poseful. For instance, Meyer and Rowan
(1977) apparently separated structure from
action as part of a gambit for challenging the
idea that organizational structures direct
work intentionally and rationally:
There is need for an explanation of [the rise of
formal organizations] that is partially free
from the assumption that, in practice, formal
structures actually coordinate and control work.
Such an explanation should account for the
elaboration of purposes, positions, policies, and
procedural rules that characterizes formal
organizations, but must do so without suppos-
ing that these structural features are imple-
mented in routine work activity (1977: 343, italics
added)
Meyer and Rowan’s agenda was to under-
cut the assumption that plans and structures
cause action, a myth that Bittner (1965) and
Silverman (1971) had already debunked
from an ethnomethodological stance.
However, to say that action is not rationally
linked to structures, purposes, positions, and
policies, is not equivalent to saying there is
no relationship at all.
Early on, DiMaggio warned that dismiss-
ing agency was neo-institutionalism’s
Achilles’ heel. Noting that the ‘role of inter-
est and agency in institutional theory remains
somewhat obscure,’ DiMaggio (1988: 3–5)
took institutionalists to task for emphasizing
‘factors that make actors unlikely to recog-
nize or to act on their interests’ and ‘circum-
stances that cause actors who do recognize
and try to act on their interests to be unable
to do so effectively.’ He went on to call atten-
tion to what he called the paradox of institu-
tionalization:
Institutionalization as an outcome places organiza-
tional structures and practices beyond the reach of
interest and politics. By contrast, institutionaliza-
tion as a process is profoundly political and reflects
the relative power of organized interests and the
actors who mobilize around them. (DiMaggio,
1988: 13)
DiMaggio argued that most institutional
research had emphasized outcomes over
process. In response, he called for studies of
institutional entrepreneurs: Men and women
who intentionally or unintentionally create
institutions as a way of achieving their
own interests or the interests of groups they
represent.
 COALFACE INSTITUTIONALISM
Taking DiMaggio’s call seriously, a
number of institutionalists have recently
begun to investigate how individuals, organi-
zations or professions wittingly or unwit-
tingly created institutions by pursuing
lines of action (Fligstein 2001; Seo and
Creed 2002; Venkatesh and Shin 2005;
Greenwood and Suddaby 2006; Battilana
2006; Leca 2006). Young scholars have also
paid more attention than earlier institutional-
ists to how people cast meaning (Lawrence
and Phillips 2004; Munir and Phillips 2005;
Grodal 2007). Nevertheless, because the idea
of an entrepreneur encourages studies of
‘foundings,’ tales of entrepreneurial agency
usually end once an institution has been
established. Although the actions of entrepre-
neurs are surely a crucial part of the story of
institutionalization, focusing on entrepre-
neurs skirts the idea that agency and action
are also important for maintaining and
modifying institutions.13
Some scholars, realizing that agency is
implicated at all phases of an institution’s
lifespan, have attempted to reformulate insti-
tutionalization in light of Giddens’ (1984)
concept of structuration (Barley and Tolbert
1997; Lounsbury and Kaghan 2001; Sandfort
2003; Battilana 2006).14 Structuration theory
portrays institutions simultaneously as con-
straints on and products of social action.
Giddens (1984) called this reciprocal causal-
ity the ‘duality of structure.’ Furthermore,
structuration implies that researchers can
only document how individual and collective
action creates, preserves or changes institu-
tions by taking a longitudinal view. Having
made these points, however, Giddens says
little about how to identify much less study
structure’s duality. The need to forge empiri-
cal tools led Barley (1986) to blend structura-
tion theory with Strauss’s more pragmatic
notion of negotiated order and to study
‘structuring’ by observing how scripted inter-
actions evolved over time.15
The notion of structuring was long latent
in interactionist scholarship. For instance,
Blumer (1962: 189–90) argued that a
reciprocal relationship between actions and
499
institutions lay at the core of symbolic inter-
actionism’s view of society:
concerns with organization on one hand and with
acting units on the other hand set the essential dif-
ference between conventional views of human
society and the view of it implied in symbolic inter-
action … The difference is along two major lines.
First, from the standpoint of symbolic interaction
the organization of a human society is the frame-
work inside of which social action takes place and
is not the determinant of that action. Second, such
organization and changes in it are the product of
the activity of acting units and not of ‘forces’
which leave such acting units out of account …
Social organization enters into action only and to
the extent to which it shapes situations in which
people act, and the extent to which it supplies
fixed sets of symbols which people use in interpret-
ing their situations.’ (1962: 189–90)
Structural duality was also implicit in how
interactionists understood the core constructs
around which they organized their research:
roles, rules, careers, status, identity, and so
on. For Hughes and his students, these Janus-
faced concepts oriented attention simultane-
ously in two directions (Barley 1989). On
one hand, they pointed to patterned forms of
action and participation characteristic of life
in some social domain. In the case of a role,
for instance, the relevant patterns were the
recurrent behaviors and types of interactions
that were more or less common to and
expected of all who fill a role. To be a police-
man entails wearing a specific kind of uni-
form, carrying a gun, stopping speeding
motorists, handing out parking tickets, keep-
ing a watchful eye on public events, making
court appearances, persuading loiterers to
move along, directing traffic, issuing orders
to people from various walks of life, and
having those orders obeyed, however grudg-
ingly (see Van Maanen 1973, 1975).
Similarly, having a career also denotes a
structured and recognized form of participa-
tion in a social world: A stream of identifi-
able positions, offices, statuses and situations
that serve as landmarks for gauging a
person’s movement through an organization,
occupation, family, avocation, or subculture
(Hughes 1937: 403; Becker 1963: 24; Braude
1975: 141; Faulkner 1974: 132; Goffman
500 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
1961: 127). In Hughes’ terminology, this
constitutes the ‘objective’ (Berger and
Luckman would say, ‘objectivated’) aspect
of a role or a career: Its institutional or public
face which requires some kind of overt
behavior.
On the other hand, for Chicagoans, role
and career also pointed to the incumbent’s
subjective experience. By subjective experi-
ence interactionists meant the meanings that
individuals attribute to their role or career.
The subjective side of a role entails accounts
or definitions of both self and others that
enable individuals to orient to situations.16
In the case of policing, for instance, Van
Maanen (1978) described how interpretations
of self and others are crucial to how police
classify and, then, behave toward people they
encounter on patrol. A ‘subjective career’
similarly encompasses its incumbent’s sense
of becoming, which enables her to develop a
narrative of and align herself with the events
of her biography. Subjective careers are the
tales people tell to themselves and others that
lend coherence to the strands of their life.
More importantly for present purposes, such
interpretations and enactments lay founda-
tions for change in role behaviors and career
trajectories that eventually modify a role’s or
a career’s institutional face.
Unlike Linton (1936) and Parsons (1951),
the Chicagoans did not conceive of roles as
predefined sets of rights and duties that could
be donned and doffed. Instead they sub-
scribed to Mead’s (1934) notion that roles
emerge in an ongoing process of negotiation,
a ‘conversation of gestures,’ during which
individuals develop a repertoire of behaviors
and attitudes tailored to specific interactional
partners. For interactionists, ‘role making’
was as important as ‘role taking.’ Role
making (among other dynamics) allowed for
variations that might eventually reformulate
a role’s institutional face (McCall and
Simmons 1978; Turner 1962, 1968, 1976,
1978)
Strauss further developed the interaction-
ists’ imagery of a reciprocal relationship
between structure and action in his much
overlooked body of work (at least in organi-
zation studies) on negotiated order. Strauss
believed that unraveling the link between
action and structure was one of sociology’s
primary tasks. Foreshadowing Giddens by
over a decade, he and Schatzman wrote:
‘Institutions impose limitations upon prac-
tices and ideas, but in turn are modified by
them. The precise ways in which these are
related is an important aspect of sociological
inquiry’ (Schatzman and Strauss 1966: 13).
Strauss’s interest in negotiated order began
with a field study of a psychiatric hospital in
the late 1950s where he and his colleagues
encountered competing ideologies of illness
and treatment (Strauss et al. 1963, 1964).
Proponents of these ideologies espoused dif-
ferent visions of a psychiatric hospital’s
mission and how such hospitals should be
organized and administered. At roughly the
same time, Rue Bucher (Bucher and
Schatzman 1962; Bucher and Stelling 1977)
documented analogous ideological disputes
raging in pathology: some pathologists saw
their field as a science, while others believed
it should be treated as a medical specialty.
In their jurisdictional battles, these two
camps formed alliances with different groups
of physicians, championed different systems
of education, formed different professional
associations, and politicked for different
roles in the medical community. Strauss and
his collaborators explicated and refined the
idea of negotiated order throughout the
1960s (Bucher and Strauss 1961; Bucher and
Schatzman 1962; Schatzman and Bucher
1964; Glaser and Strauss 1965, 1968;
Schatzman and Strauss 1966; Bucher and
Stelling 1969). Their effort culminated
with the publication of Strauss’s (1978a)
Negotiations.
Strauss insisted that all social orders are
negotiated: That is, all social systems are the
sediments of a history of voting, decree, con-
flict, agreement, compromise, bargaining,
persuasion, coercion, and other forms of
interaction by which humans seek to achieve
their interests and legitimate their perspec-
tives. Strauss wrote that the negotiated order
 COALFACE INSTITUTIONALISM
of an organization, such as a hospital or firm,
was ‘the sum total of the organization’s rules
and policies, along with whatever agree-
ments, understandings, pacts, contracts, and
other working arrangements currently
[obtain]. These include agreements at every
level of organization, of every clique and
coalition, and include covert as well as overt
agreements’ (1978a: 6). An important corol-
lary is that negotiated orders are temporally
bound. Over time every negotiated order is
‘reviewed, reevaluated, revised, revoked or
renewed’ (1978a: 5). Strauss noted, however,
that because structural conditions influence
who can negotiate with whom, when, and
about what, negotiated orders ought not be
viewed as products of unconstrained agency
(1978a: 5). The arrival of new participants, a
shift in a law, or the development of
new technologies could exogenously trigger
revisions of a current order.
Strauss argued that negotiated orders not
only have scope or range, they are also usu-
ally nested in the sense that concentric circles
are nested. The negotiated order of an
accounting firm, for example, operates
within the negotiated order of accounting as
a profession. The former cannot ignore the
latter and still remain an accounting firm in
good standing. Some aspects of a negotiated
order are, therefore, likely to be local, while
others have wider scope. Those with the
widest scope may be created from the top
down by people with either the authority to
direct others or a mandate to act on their
behalf, as would be the case, respectively,
with the imposition of a regal decree or an
agreement forged through collective bargain-
ing. Alternately, negotiated orders with a
wide scope may bubble up from below, as
Strauss described for institutions of mental
health:
In what sense can it be said that [the negotiations
he observed in the hospital he studied] … had a
determinable impact on the larger social setting
[national or professional]? Obviously, no single
negotiation or even one hospital had much
impact. Yet the many such ‘experiments’ taking
place simultaneously or over a very few years must
have had considerable impact – in giving new
501
kinds of training to professionals; changing their
attitudes toward professional partners, toward
their own work and toward themselves; altering
their ideologies; opening up new types of careers;
and so on. Negotiated agreements and actions
were very much a part of that consequential fer-
ment. Said another way, the negotiations were
integral to the subsequent changes in the state of
the mental health professions and their associated
institutions. (Strauss, 1978a: 122)
In fact, in some cases, top-down and grass-
roots forms of action may work in concert.
Strauss proposed a three-level ‘paradigm’
(or model) for studying negotiated order
(Strauss 1978a: 98–99). The paradigm’s pur-
pose was to ensure that researchers would
not forget to tie situated action to macro-
social contexts. At the lowest level – the level
of ongoing action – were negotiations whose
attributes might vary systematically by the
type of actors involved, by their strategies
and tactics, and by other characteristics of
people’s actions and interactions.
Negotiations might yield many types of out-
comes including organizations, conventions,
practices, rules, understandings or working
agreements. Second, Strauss claimed that all
negotiations occurred within a negotiation
context, a set of local conditions that shaped
the actions and interactions that comprised
the negotiations. For Strauss, the analytically
relevant aspects of negotiation contexts
included the number of actors involved,
whom they represented, their relative balance
of power, whether negotiations occurred
once or were ongoing, whether sessions
occurred sequentially or simultaneously on
multiple fronts, whether the negotiations
were visible or hidden, the number and com-
plexity of the issues involved, and the legiti-
macy of those issues (Strauss 1978a: 100).
Finally, Strauss claimed that negotiation
contexts were, in turn, situated within a
structural context, a system of more encom-
passing institutions. The larger institutions
that were relevant for a set of negotiations
would vary considerably across negotiation
contexts. For instance, the institutions
that constrain the negotiations of a corporate
executive would differ from those that
502 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
constrain how and for what high school prin-
cipals negotiate. On this point Strauss
(1978a: 98) wrote, ‘The structural context for
covert negotiations engaged in by a corrupt
judge includes features of the American judi-
ciary system and of marketplaces, while the
structural context of the negotiations that
occur in a mental hospital includes the prop-
erties of American medical care, the subspe-
cialty of psychiatry, specialization among the
caring professions, and the division of labor
in mental hospitals.’
Curiously, Giddens and others have
depicted structuration using three-layered
models analogous to Strauss’s paradigm of
negotiated order (see Giddens 1984: 12;
Barley 1986: 82; Barley and Tolbert
1997: 97; Yates and Orlikowski 1992: 307).
Negotiations, that occur in the here and now,
belong to what Giddens’ (1984: 11), Barley
and Tobert (1997: 97) and Orlikowski
(2000: 410) respectively called ‘systems of
interaction,’ ‘the realm of action,’ and the
realm of ‘ongoing situated human action.’
Strauss’s notion of a structural context paral-
lels what Giddens (1984: 31) called the
‘structure of the institutional order’ or what
Barley and Tolbert (1997) called the ‘realm
of institutions.’ Negotiation contexts mediate
between negotiations and structural contexts,
as do scripts in Barley’s (1986) model of
structuring or modalities in Giddens’ model
of structuration (1984: 29). In fact, Barley
argued that scripts were exteriorized social
forms that comprise part of the negotiation
context. Finally, in Strauss’s paradigm, as in
all structuration models, influence moves up
and down levels. As Maines put it in his
exegesis of negotiated order theory:
Strauss emphasizes that the lines of influence
can go both ways, in which the consequences of
negotiations can be measured (eventually) in
changes in structural contexts, and in which struc-
tural contexts condition how people will act ….
Negotiation contexts are created insofar as certain
elements of [the structural context] are incorpo-
rated into or become relevant to negotiations, but
negotiations may work their way back through
negotiation contexts ‘up’ to structural contexts.
(1982: 270)
In sum, taken as a whole, it is fair to say
that negotiated order theory is more accessi-
ble, but less well-developed, than structura-
tion theory. Compared to Giddens’
encyclopedic coverage of sociological
thought, Strauss’s work on negotiations was
far less sweeping, but his language was
decidedly less obscure.17 Yet, negotiated
order theory trumps structuration theory in at
least one important regard: it emphasizes the
importance of observing situated behaviors
in specific social and temporal contexts to
determine how institutions shape actions and
how actions, in turn, form, sustain and
change institutions. Thus, unlike structura-
tion theory, negotiated order theory tells
researchers what to look for. The notion of a
social world suggests where to look.
SOCIAL WORLDS: ARENAS,
NETWORKS, MATRICES, WEBS
AND FIELDS
Although Chicagoans had used the term
‘social world’ for decades, aside from
Shibutani (1955, 1962) few did so analyti-
cally before Strauss (1978b, 1982, 1984) and
Becker (1978, 1982). In his first paper on
social worlds, Strauss (1978b: 119–121)
wrote: ‘Since the early days of Chicago-style
interactionism, the term “social worlds” has
been used sporadically, sometime descrip-
tively, rarely conceptually … We have not
developed a general view of social worlds as
a widespread, significant phenomenon, nor
have we developed a program for studying
them systematically.’ By developing the con-
cept more systematically, Strauss hoped to
push interactionists to acknowledge that
structural phenomena were as important as
interpretive phenomena in shaping the insti-
tutional order.18 ‘Though the idea of social
worlds may refer centrally to universes of
discourse,’ he cautioned his fellow
interactionists, ‘we should be careful not to
confine ourselves to looking merely at forms
of communication, symbolization … but also
 COALFACE INSTITUTIONALISM
examine palpable matters like activities,
memberships, sites, technologies and orga-
nizations typical of social worlds.’
(1978b: 121). In subsequent papers, Strauss
(1982, 1984) elaborated:
Social worlds refer to a set of common or joint
activities or concerns, bound together by a net-
work of communication …. One can point to such
social worlds as those of opera, ballet, baseball,
surfing, art, stamp collecting, mountain climbing,
homosexuality, and medicine, although the con-
cept also is probably useful in conceptualizing and
studying industries and the sciences. These social
worlds vary considerably in size, types, number
and varieties of central activities, organizational
complexity, technological sophistication, ideologi-
cal elaboration, geographical dispersion, and so on
… One of the most important features of social
worlds is their inevitable differentiation into sub-
worlds … The conceptual imagery here is of
groups emerging within social worlds, evolving,
developing, splintering, disintegrating or pulling
themselves together, or parts falling away and per-
haps coalescing with segments of other groups to
form new groups, often in opposition to older
ones – in short, of subworlds intersecting, in pow-
erful contact with other subworlds both within the
parent social world and with those ‘inside’ other
social worlds (1982: 172).
To begin unpacking this fluid notion of
social worlds, notice first that Strauss (as
well as Becker 1978) used the plural rather
than the singular form of the noun. Plurality
is crucial. Rather than see social worlds as
distinct units, interactionists viewed social
worlds as fuzzy sets composed of elements,
which Strauss called subworlds. Subworlds
are themselves social worlds that are con-
nected though their joint involvement in a
primary activity. It is this joint involvement
that warrants speaking of the elements as a
set. Illustrative activities that serve as the
basis for social worlds include the production
of a form of art, such as a painting or play
(Becker 1978, 1982), the manufacturing of
computers (Kling and Gerson 1978a, 1978b;
Kling and Sacchi 1982), the production of
books (Coser, Kadushin, and Powell 1982;
Powell 1985), the making of musical scores
(Faulkner 1987), the manufacturing of wafer
fabrication equipment (Bechky 2003a,
2003b), the hiring and placing of technical
503
contractors (Barley and Kunda 2004), or the
playing of games like Dungeons and
Dragons and Little League Baseball (Fine
1983, 1987).
Second, Strauss emphasized that social
worlds cleave around sites (places where
activities routinely occur and where key
actors are found), technologies (tools, tech-
niques and procedures for carrying out key
activities) and most importantly, divisions of
labor.19 For example, the thespian world
requires theaters where plays can be per-
formed and audiences can be seated, work-
shops for making props, dressing rooms for
actors to prepare their bodies, box offices for
selling tickets, print shops for printing pro-
grams, and so on. The thespian world also
must have lighting, sound systems, curtains,
wrenches and pulleys, printing presses, car-
penter’s tools, etc. Most importantly, to pull
off plays there must be actors, directors,
producers, stage hands, lighting engineers,
printers, patrons, advertisers, janitors, ticket
agents, critics, electricians, manufacturers of
cosmetics, costume designers, and seam-
stresses among others.
These structural features (sites, technolo-
gies and divisions of labor) are usually the
nuclei around which ‘subworlds’ form.
Subworlds control and are responsible for
providing materials and services that are cru-
cial for accomplishing the world’s overarch-
ing activity. Because of differentiation,
representatives of subworlds are linked via
webs of patterned interaction, communica-
tion and transaction that allow them to pull
off the world’s primary activity. The exis-
tence of social worlds, therefore, implies the
existence of social networks, which are use-
fully understood as a social world’s essential
structure. However, social worlds cannot be
reduced to networks. Doing so would focus
attention tightly on structures and flows to
the exclusion of culture and action.
Accordingly, and third, Strauss held that
interpretive and political phenomena are
integral to the organization of social worlds.
Ideologies, perspectives, theories, agendas,
points of view, interests, and languages
504 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
differentiate the participants who are bound
together by networks and their joint contribu-
tion to a central activity. Interpretive differ-
ences – which are rooted in the social world’s
division of labor – engender conflicts, ten-
sions, alliances, movements, and disputes.
Thus, the interplay between networks and
notions is central to any analysis of social
worlds. The idea that social worlds have
interpretive and political as well as structural
topographies is what links the analysis of
negotiated order to the study of social
worlds. As Strauss et al. (1964) showed for
psychiatric hospitals, differences in perspec-
tives and interests motivate negotiations that
configure and reconfigure institutions.
Political and interpretive phenomena are
essential for understanding the dynamics of
social worlds because they manufacture and
sustain the legitimacy of a social world’s
institutions and practices:
One can initially imagine something of the nature
of legitimation problems which arise in that kind of
social matrix. Questions of ‘authenticity’ of per-
formance and product, of genuineness and purity,
real and fake, but questions also of propriety and
impropriety, even morality and immorality, and
legality and illegality arise in kaleidoscopic, rapid
and intricate fashion – not merely in areas like ‘the
arts’ with their perennial legitimacy arguments and
dilemmas, but in presumably less problematic,
seemingly less ideologically-ridden areas like med-
icine, the sciences, industry and business. Imagery
for what occurs in these rapidly changing social
worlds and subworlds should be the very opposite
of what is called up by the term ‘stable’ society …
legitimacy in these worlds pertains to issues like
what, how, when, where, and who can legiti-
mately or properly do certain things, with certain
means and materials, at appropriate places and
times, and in certain acceptable ways … under-
standing of the legitimation process associated
with social worlds will require a close look at the
arenas in which such issues are fought out.
(Strauss, 1982: 172–73)
Struggles for legitimacy in social worlds
were, for Strauss, the engine of action and a
source of intrigue. In other words, legitimacy
was always the product of negotiations.
Fourth, Strauss emphasized that social
worlds are always in process; the only ques-
tion is the rate at which the process unfolds.
Strauss claimed that segmentation and inter-
section were central processes of the
structuring in social worlds. The former is
equivalent to the organizational theorist’s
notion of differentiation; the latter fuses
the organizational theorist’s concept of
integration with the idea of overlapping
jurisdictions. Ultimately the imagery of
segmentation and intersection invokes a
shifting institutional landscape. Examined
over time, analysts should see social worlds
and subworlds form around new technolo-
gies or ideas, split, fuse, challenge each
other’s bids for expertise, forge alliances,
and so on.
Writing before the spread of microcomput-
ers, Kling and Gerson (1978a) claimed that
the world of computing cleaved along four
axes. The first axis was type of computing:
specifically, scientific, commercial, indus-
trial, and academic computing. The second
axis was the kind of technology or equipment
used. The third was type of application: for
example, financial, medical or government
applications. Interestingly, the fourth dimen-
sion was where actors positioned themselves
relative to IBM. Since the 1970s, the land-
scape of the world of computing has changed.
Personal computers have replaced main-
frames and minicomputers in most, but not
all, computing subworlds. COBOL and
FORTRAN have died, and other languages
have taken their place. New areas of appli-
cation have arisen, including gaming and
animation. Applications that were once
separated are now integrated: for instance,
financial and human resources databases
(by SAP, Oracle, etc.) or word processing and
presentation software (Microsoft(R) Office).
Perhaps most telling, positioning relative to
IBM is arguably far less important today than
positioning relative to Microsoft.
Finally, for Strauss and other interaction-
ists, social worlds constituted a unique unit
of analysis. Accomplishing a primary acti-
vity usually involves actors from a variety of
industries, social sectors, subcultures, occu-
pations, firms, interest groups, organizations,
and so on. Social worlds, therefore, enroll
 COALFACE INSTITUTIONALISM
participants who cut across the units of
analysis that have traditionally preoccupied
organizational theorists and other social sci-
entists. For this reason, researchers who set
their sights solely on organizations, indus-
tries or occupations, are unlikely to find
social worlds. Seeing social worlds requires
greater focal length.
By now it should be clear that the interac-
tionists’ notion of social worlds bears an
uncanny resemblance to what institutional-
ists have called organizational fields. Indeed,
it is not unreasonable to argue that the inter-
actionists and institutionalists arrived at
roughly the same analytic destination at more
or less the same time unbeknownst to each
other. Consider, for example, DiMaggio and
Powell’s (1983) definition of an organization
field in light of the foregoing discussion:
By organizational field, we mean those organiza-
tions that, in the aggregate, constitute a recog-
nized area of institutional life: key suppliers,
resource and product consumers, regulatory agen-
cies, and other organizations that produce similar
services or products. The virtue of this unit of
analysis is that it directs our attention not simply to
competing firms … or to networks of organiza-
tions that actually interact … but to the totality of
relevant actors. In doing this, the field idea com-
prehends the importance of both connectedness
and structural equivalence. The structure of an
organizational field cannot be determined a priori
but must be defined on the basis of empirical
investigation. (1983: 148)
DiMaggio and Powell tell us that an orga-
nizational field ‘constitute[s] a recognized
area of institutional life,’ which echoes
Strauss’s notion of a ‘primary activity.’ Also
like Strauss, DiMaggio and Powell note that
fields have divisions of labor that bind a
field’s actors into a network of relations.
Finally, DiMaggio and Powell portray field
as a unique unit of analysis in precisely the
same sense that Strauss saw a social world as
a crosscutting unit.
Nevertheless, there seem to be three
important differences between the con-
cepts of social world and organizational
field. First, Strauss and other interactionists
portrayed social worlds as populated by a
505
variety of collectives (occupations, associa-
tions, subcultures, organizations, etc.), while
the institutionalists, being organizational the-
orists, have written as if fields comprise pri-
marily organizations. While accurate, this
difference is less important than it might first
appear to be. Although Strauss was not an
organizational theorist and was apparently as
unaware of what the neo-institutionalists
were doing as they were of him, he would
have applauded their agenda. In his first
paper on social worlds, Strauss explicitly
noted that research on social worlds of
organizations was sorely lacking:
Organizations are commonly viewed as relatively
closed in their boundaries, and there are few good
analyses of interorganizational relations. The social
world perspective tells us that some organizations
are relatively embedded within a social world,
while others stand at intersections, indeed may
have been intentionally constructed that way. The
understanding of organizational evolution,
change, and functions requires an examination of
relations embedded in the same or intersecting
worlds … Organizational theory which ignores
these considerations is likely to sell us very short.
(Strauss 1978b: 125)
Second, the notion of a social world draws
attention to interpretive phenomena that join
as well as delineate and divide actors
involved in the pursuit of a primary activity.
In contrast, field has a stronger overtone of
structure, especially that of network struc-
ture. Accordingly, students of social worlds
are more likely to view legitimation as a
problem of constructing, contesting and
defending interpretations rather than a
problem of acquiring status or standing in the
eyes of others. Students of social worlds,
therefore, have paid more attention to
struggles for legitimacy than have institution-
alists, who more commonly study sources of
legitimacy.
Finally, in social world analysis the vari-
ous strands of an institutional order – rheto-
ric, political action, organizations, laws,
ideologies, and so on – implicate each other.
Thus, rather than treat institutions as well-
bounded practices, interactionists typically
speak of institutions as forming the ‘web,’
506 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
‘matrix’, or ‘fabric’ of a social world. These
differences point to two topics about which
interactionists still have much to offer institu-
tionalists: the social construction of
legitimacy, especially in the course of ongo-
ing action, and the study of institutional
complexes.
WHAT INSTITUTIONALISTS CAN
LEARN FROM INTERACTIONISTS
Doing legitimacy
No concept is more central to institutional
theory than legitimacy. Yet, as Suchman
(1995: 571) noted, ‘Despite its centrality …
the literature on organizational legitimacy
provides surprisingly fragile conceptual
moorings. Many researchers employ the
term … but few define it.’20 Furthermore,
even though institutionalists continually
remind us that legitimation is a process, until
recently they have written more about
sources of legitimacy, about whom or what
bestows it, than about how it is bestowed.
Sources of legitimacy commonly mentioned
in the literature include public opinion, the
educational system, laws, courts, and, of late,
higher-status others.
Although, the Chicagoans understood well
that socialization, reputation, power, position
and authority meant that some actors had
greater (and perhaps final) say over what is
legitimate, they trained their eyes less on
sources and more on struggles for legitimacy.
Histories of how a modus operandi, a law, a
practice, or even an organizational form
acquired legitimacy are ultimately tales of
how people deploy ideas, ideologies, frames,
and arguments in negotiations, persuasions,
and political contests that unfold over time,
often across multiple places and arenas. From
this perspective meaning and action are both
crucial for constructing legitimacy. Legitimacy
hinges not only on the substance of ideas and
claims, but also on where, when, how, and
why people wield ideas and lodge claims.
Strauss (1982) argued that actors use five
strategies for building for what Hughes
(1962/1971: 287–292) would have called a
mandate and license: (1) discovering, claim-
ing and promoting the worth of their agenda,
belief or stance, (2) developing theories that
bolster their interests or perspectives with a
veneer of rational, moral and even scientific
respectability, (3) distancing themselves
from rivals and alternate ideas, (4) setting
standards of practice or belief that can be
employed in evaluative accounts, and
(5) establishing the boundaries of their juris-
diction. As actors struggle over legitimacy,
they employ a wide range of resources rang-
ing from court rulings, prophecies, scientific
theories, and high status allies to books, edi-
torials, films, and even the occasional payoff.
Institutionalists have spent much of the
last decade rediscovering the role that inter-
pretations and negotiations play in the social
construction of legitimacy. Some have drawn
inspiration from contemporary social move-
ment theory, which emphasizes the impor-
tance of competing frames or ways of
making sense out of situations, conditions,
and events (Rao 1998; Creed, Scully, and
Austin 2002; Rao, Monin, and Durand 2003).
Others have turned to rhetorical, narrative,
and discourse analysis (Hoffman 1999;
Edelman, Fuller, and Mara-Drita 2001;
Greenwood, Suddaby, and Hinings 2002;
Suddaby and Greenwood 2005; Lawrence
and Philips 2004; Munir and Phillips 2005;
Greenwood and Suddaby 2006; Colyvas
and Powell 2006). Regardless of their
starting point, however, all have explored
how individuals, occupations, organizations,
or coalitions deploy language, symbols,
assumptions, theories, or frames to develop
and promote their agendas or views of the
world. In these papers, interests, politics, and
contestation are always front and center,
regardless of whether the institution under
construction be a new organizational form
(Lawrence and Philips 2004; Suddaby
and Greenwood 2005; Greenwood and
Suddaby 2006), a redefinition of an institu-
tion’s mission and boundaries (Colyvas and
 COALFACE INSTITUTIONALISM
Powell 2006), the passage of a law (Creed
et al. 2002), the reinterpretation of a law
(Edelman et al. 2001), the emergence of an
occupation (Lounsbury and Kaghan 2001),
or the promotion of a set practices that define
the role of a product in everyday life (Munir
and Phillips 2005).
Nevertheless, despite the common empha-
sis on interpretation, the new institutional
scholarship on legitimation differs from the
interactionists’ work in important ways.
First, the institutionalists almost always
employ textual rather than observational
data. Second, because the texts are drawn
from archives, they afford longitudinal
analysis. Consequently, recent interpretive
scholarship on institutions covers longer
periods of time than even the most dedicated
fieldworker could hope to cover. Taking the
long view allows institutionalists the neces-
sary resolve for identifying what Hughes
might have called the stages and turning
points in an institution’s career. In fact, for
institutions with broad range, analysis of
texts may be the only way to study the pro-
tracted twists and turns of legitimation over
the long duré.
Yet, precisely because textual analysis
opens up the panorama of history, it has dif-
ficulty focusing on how struggles for legiti-
macy played themselves out in daily life. To
be sure, texts offer clues to how people inter-
preted a phenomenon at some point in time,
and they can point to the perspectives of dif-
ferent factions. Texts often have relatively
little to say, however, about how people
arrived at those interpretations or what the
members of various factions did to each
other. Furthermore, texts are almost always
silent on what led to the creation of the doc-
ument in the first place. To answer questions
about legitimation in action, one must exam-
ine behavior in situ and in real time. This is
where the Chicagoans excelled. For an
appreciation of how interactionist studies
could enrich our understanding of the situ-
ated dynamics of legitimation, consider
Nelsen and Barley’s (1997) account of
how paid and volunteer emergency medical
507
technicians (EMT’s) vied over who should
deliver emergency medical services in local
communities.
By 1970, volunteer rescue squads pro-
vided emergency transportation in most
American communities. Towns and cities
across the country had formed volunteer
squads during the 1950s and 1960s in
response to a social movement and subse-
quent legislation designed to reduce highway
fatalities. Growing pressure to medicalize
emergency services culminated, in 1973,
with the Emergency Medical Services Act,
which required that all responders have
formal training in emergency medicine.
Although the Act took no stance on whether
volunteers or ‘professionals’ should deliver
such services, by the 1990s private firms
employing professional, fulltime EMTs had
begun to compete with volunteer squads.
Jurisdictional dramas over the proper deliv-
ery of emergency medicine were being
played out on a daily basis on the streets of
villages, towns, and cities. Although advo-
cates of voluntary and professional services
recorded their perspectives in documents
amenable to textual analysis, no documents
recorded the type of behavior that Nelsen
observed while riding with paid and
voluntary squads in two upstate New York
communities.
Nelsen and Barley (1997) recount, among
other tactics, how paid EMTs pushed volun-
teers aside on arriving at the scene of an acci-
dent, how they belittled volunteers’ skills
before patients, doctors, and nurses, and how
they rewrote paperwork to expunge evidence
that volunteers had ever been involved in
responding to an accident. In these and other
ways, paid EMTs actively fostered the per-
ception that they were more competent than
volunteers and that they were more deserving
of a mandate to provide emergency medical
services to the community. Without behav-
ioral data, researchers examining the juris-
dictional dispute would have difficulty
discovering that the battle to legitimate
professional emergency medical service
(EMS) was waged with more than ideology
508 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and rhetoric. Worse, because hospital records
often did not mention the volunteers who had
been on the scene, researchers might con-
clude that no volunteers had been active.
In short, grounded studies of action and
interaction are crucial for developing ade-
quate accounts of the social construction of
legitimacy, if for no other reason than that
they inoculate us against assuming that
struggles for legitimacy are largely battles of
rhetoric. As institutional analysis takes its
interpretive turn, it is well worth remem-
bering that writing, reading and rhetoric are
important for negotiating legitimacy, but
words break no bones.
Institutional complexes
An inventory of neo-institutional organiza-
tional studies will reveal that researchers
have often treated institutions as well-
bounded entities and their construction as a
matter of diffusion. For instance, institution-
alists have studied the spread of formal
evaluation and performance systems in
municipal governments (Tolbert and
Zucker 1983), personnel offices (Dobbin and
Sutton 1998), maternal leave policies (Kelley
and Dobbin 1999) and poison pills (Davis
1991). Even the interpretive studies of legiti-
macy discussed above treat institutions as
discrete phenomena. For instance, Suddaby
and Greenwood (2005) focused on the rise
of multidisciplinary accounting firms.
Lounsbury and Kaghan (2001) examined the
spread of recycling programs across universi-
ties. Lawrence and Philips (2004) explored
how a particular set of whale watching prac-
tices emerged in Victoria, Canada. Studying
well-specified forms and practices makes
pragmatic, epistemological sense: A clear
focus on an identifiable phenomenon allows
researchers to target specific institutional
processes. Focusing on discrete phenomena
also makes for a more manageable story,
especially within the constrained space of a
journal article. However, should the image of
institutions as well-bounded phenomena
become an ontological assumption, organiza-
tion studies would be left with a thin view of
institutional reality.
Chicago sociologists took a thicker view.
They typically portrayed institutions as com-
plexes of related practices, conventions and
understandings. Social worlds are always
more than the sum of distinct institutions.
Consider, for example, what makes a school.
Surely a school needs teachers and students,
yet teachers and students are found in other
settings, including the boot camps run by the
U.S. Army and Al Qaeda. Tests and books
are also necessary for schools as we know
them. Yet, libraries have books and employ-
ment offices give tests, neither of which we
would confuse as a school. Even teachers,
students, books and tests are not sufficient
for making a school; one needs a host of
other actors, laws, practices, and so on. All
institutional orders are similarly complex in
this regard.21
To acknowledge precisely this sort of mul-
tiplexity, interactionists routinely described
social worlds as ‘webs,’ ‘matrices,’ or ‘clus-
ters’ of institutions (Kling and Sacchi 1982;
Strauss 1978: 172; Hughes 1962/1971: 52).
The image of a ‘web’ or a ‘matrix’ draws
attention to two key aspects of social worlds
or organizational fields. First, institutions
cluster in the sense that what distinguishes
one social world from another is an inte-
grated and unique set of institutionalized
forms, practices, and conventions. The idea
is analogous to cliquing in social network
analysis: members of a social world share
more institutions with fellow members than
they do with members of other worlds.
In other words, the density of shared institu-
tions should be higher within than across
social worlds. Second, institutions form webs
(or they cluster) in the sense that one institu-
tion is likely to implicate others. Analysts
should, therefore, beware of treating institu-
tions as discrete phenomena for any purpose
other than analytic convenience. In reality, a
change in one institutional parameter is
likely to occasion, and perhaps even require,
change in others.
 COALFACE INSTITUTIONALISM
Interactionists routinely pointed to the
complexity of institutional connectedness.
For instance, in an important paper that tied
occupational commitment to an occupation’s
institutional order, Geer (1968) noted that
teachers lacked the kind of occupational
commitment evinced by doctors, scientists
and lawyers. Geer argued the institutions of
teaching were responsible. Unlike a func-
tionalist, who might urge teachers to pursue
the traits of a profession (Etzioni 1969), or a
Marxist, who might advocate the politics of
monopoly (Larson 1979), Geer recognized
that changing the commitment of teachers
would require altering the larger web of insti-
tutions in which teaching was suspended:
Several of the mechanisms of commitment in
other occupations which we have discussed sug-
gest changes that might be brought about in the
teaching profession if lifelong commitment on the
part of more teachers is desired. But, as we have
seen, commitment is a process so closely fitted to
occupational structure that changes in it would
necessarily involve structural change in teaching as
a profession, which would, in turn, affect the
organization of the school system in ways that
might prove disruptive to other desirable goals.
(Geer 1968: 233)
In other words, to change teachers’ com-
mitment to the occupation would require
changing institutionalized relationships
between schools, communities, families,
local governments, and school boards.
Because the Chicagoans were primarily
ethnographers, their thick descriptions
tended to capture the web of institutions that
enveloped the social worlds they studied. But
the Chicagoans did not usually call attention
to how these various institutions were con-
nected. Consequently, tracing the web of
institutions that is laced throughout out a
Chicago-style ethnography usually requires
readers to do their own analysis.
Nevertheless, in most ethnographies the
material for recovering the web lies near
enough to hand.
Consider, for example, Barley and Kunda’s
(2004) recent ethnography of the con-
tract labor market for skilled technical profes-
sionals. Contracting in high technology
509
escalated during the 1980s when Microsoft
and other firms realized that they could sig-
nificantly reduce employment costs by firing
employees and hiring them back as inde-
pendent contractors. Because the practice
spread quickly, the Internal Revenue Service
(IRS) soon entered the picture and brought
suit against Microsoft for tax evasion.
Although the suit did not slow the use of con-
tractors, it did reshape the way contractors
were employed. On the advice of corporate
lawyers, firms began to acquire contractors
through staffing agencies rather than cut
deals directly with individuals. Agencies pro-
tected the firms from the IRS, because they
served as the contractor’s employer of
record. As a result, foundings of staffing
agencies devoted to high tech contracting
burgeoned in the 1990s. At this point, we
have an institutional story of the construction
and diffusion of two institutions, a type of
employment (contracting) and an organiza-
tional form (the high tech staffing agency),
each of which, in turn, reflects a larger insti-
tutional development, the rise of finance
capitalism.22 There are, however, more
strands to the institutional web that envelops
and defines the social world of contracting.
To reinforce the perception that contrac-
tors were not employees, employers began to
institute an array of practices for differentiat-
ing contractors from permanent employees.
These practices spread through mimesis and
though the intervention of consultants,
accountants, and lawyers who advised firms
on how to protect themselves from the IRS.
As a result firms began to force contractors to
wear distinct badges, to assign them to less
desirable space than employees enjoyed, to
prohibit contractors from attending meetings
in which topics unrelated to their project
were discussed, to prohibit contractors from
attending company sponsored social func-
tions and so on. In short, a series of institu-
tionalized work practices spread throughout
and across industries that hired contractors.
As more and more contractors were forced
to go through staffing agencies, contractors
also devised practices that spread by word of
510 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
mouth and that were promoted by maga-
zines, books, and websites designed to help
contractors better manage their careers. For
example, contractors discovered that to min-
imize downtime (time between contracts)
and to maximize earnings, they usually
needed to change agencies to acquire their
next contract. To dissuade contractors from
switching, agencies began to offer health
care and 401k’s.23 But, because most agen-
cies also hesitated to find contractors new
jobs before the current contract ended, few
contractors remained with an agency long
enough to secure health care or pension
funds. Thus, large numbers of contractors
saved little or nothing for retirement and
relied on their fully employed spouse for
heath insurance.
As in the case of contracting, institutional-
ization – whether defined as the construction
of meaning or the acceptance and diffusion
of practices – yields a web of conventions,
procedures, laws, and organizations that
jointly shape an arena of social life into a
social world or organizational field. The
emergence of webs of institutions and the
interplay between a web’s various strands
remains a fertile and largely unexplored
opportunity for research that could enrich
institutional theory. Although interactionism
points institutionalism in this direction, no
interactionist has yet explicitly attempted to
develop concepts for analyzing webs of insti-
tutions. A particularly fruitful line of inquiry
would be to examine the various reasons for
why one institution tends to beget, alter,
amplify, or specify other institutions.
CONCLUSION
I began this chapter by arguing that neo-insti-
tutionalism is unique in organization studies,
because it represents the only macro-sociol-
ogy of organizations rooted in micro-social
concepts. Although the early institutionalists
turned to ethnomethodology and construc-
tionism for their micro-social grounding, the
perspective forged at the University of
Chicago by Everett C. Hughes, Anselm
Strauss, and their students, is potentially more
compatible with the institutionalists’ agenda.
The Chicagoans were themselves institution-
alists, and unlike most ethnomethodologists
and constructionists, they were concerned
with institutions at the same levels of analysis
that have intrigued the neo-institutionalists.
In fact, as I have attempted to show, using a
different language, the Chicagoans antici-
pated and developed many of the stances and
perspectives that neo-institutionalists have had
to reinvent as they struggled to incorporate
social action into their analyses. My agenda in
revisiting the Chicago School has been to
point to how interactionism might help neo-
institutionalists resolve important puzzles
concerning action, legitimation and the
social construction of institutional fields.
The Chicagoans held that sociology’s job
is to study social organization in action,
which they conceived of as the link between
institutions and the person. Institutions and
actors meet in the throws of everyday life. In
this sense, as the British might say, everyday
life is institutional theory’s coalface; it is
where the rubber of theory hits the road of
reality. For over 30 years, the coalface has
lain largely idle while institutionalists have
sought their fortunes in the cities of macro-
social theory. As a result, there is plenty of
coal left to mine. What we need are more
miners.
NOTES
1 Since this chapter focuses entirely on neo-insti-
tutionalism in organizational theory, I often drop the
prefix, ‘neo,’ to make the text less clumsy.
2 As phenomenologists, Berger and Luckmann
had top pedigrees. Both studied at the New
School of Social Research under the tutelage
of Alfred Schultz, who was mentored by (but
not formally a student of) Edmund Husserl
(www.soci.canterbury.ac.nz/resources/biograph/schul
tz.shtml). Garfinkel (1967: 36) also drew heavily on
Schultz’s thought, but was not a phenomenologist by
training or intent. Garfinkel was a student of Talcott
 COALFACE INSTITUTIONALISM
Parsons at Harvard. He rejected Parsons’ structural-
functionalism, claiming, among other things, that
internalized social norms and values could not be
responsible for social structure. Garfinkel and other
ethnomethodologists vigorously rejected logical pos-
itivism, yet remained decidedly realist in their hard-
nosed empiricism.
3 In contrast, ethnomethodologists have had
much to say about work and work practices
(Emerson 1970; Suchman 1987; Cicourel 1987,
1990; Lynch 1985; Garfinkel 1986; Button 1993;
Heath and Luff 1992, 1996).
4 This assumes, of course, that the early institu-
tionalists were actually interested in micro-social
dynamics. Aside from Zucker, this was probably not
the case. Hallett and Ventresca (2006: 215) have sug-
gested that Meyer and Rowan turned to micro-soci-
ology primarily for its vocabulary of motive: ‘Given
the new institutionalist focus on macro environ-
ments,’ they wrote, ‘We can turn Meyer and Rowan’s
legacy on its head to say that organizational sociol-
ogy has been “decoupled” from its foundations
in social interaction: Passing references to micro-
sociology are a form of “myth and ceremony” that
create academic “legitimacy” ’.
5 Chicago School sociology covers at least two
generations of scholars. The first included Robert
Park, Ernest Burgess, Albion Small, and W. I. Thomas,
who were most active in the first three decades of the
20th century. The second included Everett Hughes,
Anselm Strauss and Herbert Blumer who wrote
mostly from the 1930s through the 1960s. When I
speak of the Chicago School in this chapter, unless
otherwise noted, I am referring to the second group.
6 Ironically, Hughes and his colleagues paid more
attention to organizations than did the eth-
nomethodologists. Boys in White (Becker, Geer,
Hughes, and Strauss 1961) and Psychiatric Ideologies
and Institutions (Strauss et al. 1964) were ethnogra-
phies of a medical school and a psychiatric hospital
respectively. Strauss conducted a famous set of stud-
ies on how nurses, doctors and patients construct
and manage awareness of dying on cancer wards
(Glazer and Strauss 1965). Dalton (1950) wrote
about everyday life among managers in a firm. Roy
studied union organizing (1964, 1965). Van Maanen
studied police organizations (1973, 1975). Fine
(1996) has written about restaurants and Kunda
(1992) about high tech firms. In fact, the hallmark
of these studies is the weaving together of work
and organization. By contrast, when ethnomethodol-
ogists studied life in organizations their focus
was almost exclusively on how people do their
work (Lynch 1985, Garfinkel 1986, Suchman
1987).
7 Athens, who was Blumer’s student at Berkeley,
claims that Blumer mistook the higher rate of change
of institutions in contemporary society for their
increasing irrelevance.
511
8 Furthermore, as Becker (1999: 7) revealed,
‘Hughes and Blumer … had very low opinions of one
another. Blumer thought Hughes had a second-rate
mind, and Hughes was openly contemptuous of
Blumer’s inability or unwillingness to do research.’
9 Blumer, however, did have this agenda (see
Athens 2005).
10 Although the work of Hughes and his stu-
dents is often categorized as ‘symbolic interaction-
ism,’ I avoid that term because it is more properly
applied to Blumer’s (1962) work. In this chapter I will
use ‘interactionist’ and ‘interactionism,’ since Hughes
and his students certainly did examine social relations
in everyday life.
11 See Rock (1979) and Lewis and Smith (1980)
for extended discussions of Simmel’s importance to
the Chicagoans’ concept of social structure.
12 Although Strauss received his Ph.D at Chicago
in 1945, Strauss did not align himself with Hughes
until after he joined the faculty in 1952 (Strauss,
1968: 265).
13 The term entrepreneur also raises ontological
problems. Entrepreneurs are people who usually
have some idea of what they are doing. As speakers
of English commonly use the term, it is difficult to
imagine how an entrepreneur could accidentally
found a business. Yet, as Berger and Luckmann make
clear, institutions sometimes (maybe, most of the
time) emerge with anyone intending them.
14 Although DiMaggio (1988) and DiMaggio and
Powell (1983, 1991) also used the term structuration,
they did so primarily to speak of how people create
institutions. Thus, their use of the term is closer to
Berger and Luckmann’s idea of sedimentation.
15 Barley (1986) spoke of structuring rather than
structuration to emphasize agency. Gerunds have the
utility of nouns while maintaining connotations of
action. Barley used the concept of scripts to track
structuring over time. Although scripts surely have a
cognitive component, Barley emphasized the actions
and interactions that instantiated scripts because the
latter could be observed. Besides, if people don’t do
things because of their thoughts, thoughts cannot be
real in their consequences, at least for people who
are not having the thought. With the exception of
Johnson, Smith and Coding. (2000) most commenta-
tors assume Barley (1986; Barley and Tolbert 1997)
saw scripts as cognitive rather than behavioral phe-
nomena. Orlikowski and her colleagues (1992, 1996,
2000; Orlikowski and Yates 1994) have pushed
behavioral studies of structuration further than any
other scholar with their research on the structuring
of technology and technical practice.
16 It is worth noting that when interactionists
speak of accounts, interpretations, definitions of the
situation, and so on, they are surely referring to cog-
nitions, but they almost always assume that these
cognitions are instantiated in behavior. Accounts
occur in speech; speech is a behavior and, hence,
512 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
a way of doing something. Importantly, speech can
be heard and recorded by observers, but thoughts
and cognitions can not. The interactionists were,
above all else, empiricists.
17 Like most interactionists, Strauss shied away
from Latinate nouns and wrote in a discursive, collo-
quial style. Could this help explain why organiza-
tional theorists have paid so little attention to the
interactionists? How can sociologists be erudite,
when they are so breezy to read? As Mark Knophler
put it, ‘sociologists invent words that mean industrial
disease.’
18 Ironically, sociologists from other traditions,
including many institutionalists, require precisely the
opposite advice: interpretive phenomena are as
important as structural phenomena.
19 One might argue that with the rise of life on
the screen (Turkle 1995) tangible sites for action are
no longer necessary for social worlds to form. Be this
as it may, it is quite interesting to note that even vir-
tual worlds like Second Life and Warcraft are marked
by virtual places, virtual divisions of labor and virtual
technologies. In fact sometimes the divisions of labor
are real, as in the case of Warcraft where real people
spend time creating virtual characters and accumu-
lating virtual money which they sell to real people for
real dollars so the buyers can participate in a virtual
division of labor.
20 Suchman went on to define legitimacy as ‘a
generalized perception or assumption that the
actions of an entity are desirable, proper, or appropri-
ate within some socially constructed system of
norms, values, beliefs, and definitions … Legitimacy
is a perception or assumption in that it represents a
reaction of observers to the organization as they see
it; thus, legitimacy is possessed objectively, yet cre-
ated subjectively. An organization may diverge dra-
matically from societal norms yet retain legitimacy
because the divergence goes unnoticed. Legitimacy
is socially constructed in that it reflects a congruence
between the behaviors of the legitimated entity and
the shared (or assumedly shared) beliefs of some
social group; thus, legitimacy is dependent on a col-
lective audience, yet independent of particular
observers. An organization may deviate from individ-
uals’ values yet retain legitimacy because the devia-
tion draws no public disapproval. In short, when one
says that a certain pattern of behavior possesses
legitimacy, one asserts that some group of observers,
as a whole, accepts or supports what those observers
perceive to be the behavioral pattern, as a whole,
despite reservations that any single observer might
have about any single behavior, and despite reserva-
tions that any or all observers might have, were they
to observe more’ [1995: 574].
21 Garfinkel (1967) played off this complexity in
his analysis Agnes, a young transsexual soon to
undergo a sex change. As Garfinkel noted, there
was no one institutionalized practice, convention or
understanding that allowed Agnes to pass as female.
Neither dress, nor stance, nor gait, nor even attitude
was adequate for Agnes being seen as a woman.
Rather Agnes had to display and was adept at dis-
playing these and many other gendered traits and
behaviors in a highly integrated fashion. In other
words, the institution of gender is a multifaceted
concept, no one strand of which is sufficient for
defining a person as male or female, however neces-
sary that facet may be.
22 Finance capitalism matters because contract-
ing is about turning the fixed cost of labor into a vari-
able cost. Wall Street not only encourages firms to
maximize variable costs, but also rewards them for
doing so. Shifting to contractors boosts a firm’s stock
price, at least temporarily, because contractors are
not included in the denominators of productivity
ratios. Thus, shifting from employees to contractors
not only makes a firm appear more flexible but more
productive than it is.
23 A 401k is a pension plan that allows individu-
als to shelter money from each paycheck for retire-
ment free of taxation until the individual has retired,
begins to withdraw the funds and is presumably sub-
ject to a lower tax rate.
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New Sociology of Knowledge:
Historical Legacy and
Contributions to Current Debates
in Institutional Research
INTRODUCTION
When laying the foundations for neoinstitu-
tional theory in 1977, both of the subsequent
classic articles (Meyer/Rowan 1977; Zucker
1977) pointed to Peter L. Berger and Thomas
Luckmann’s Social Construction of Reality,
first published in 1966, as a central theoreti-
cal foundation and inspiration for their
research program. In the equally influential
‘orange book,’ DiMaggio and Powell (1991)
underline that Berger and Luckmann’s
phenomenological approach, together with
Harold Garfinkel’s ethnomethodology
(another American scholar strongly influ-
enced by Alfred Schütz; see also Psathas
2004), provides ‘the new institutionalism
with a microsociology of considerable
power.’
Today, beyond doubt, Berger and
Luckmann’s ‘new’ or social constructionist
21
Renate E. Meyer
sociology of knowledge has become one of
the classics in sociological thinking. In
neoinstitutional theory, it is still among the
most frequently quoted references and gener-
ally assumed to be one of the approach’s
main theoretical pillars. As with many
classics, however, the current citation is often
made in passing and is more frequently a
tribute paid to their overall contribution to
the field than as guidance in concrete theoret-
ical, conceptual or methodological questions.
Four decades after its first publication, the
actual impact of the sociology of knowledge
seems to be lagging behind its omnipresence
in the bibliographies of institutional
analyses.
The Social Construction of Reality was
originally published in the United States, but
Berger and Luckmann’s biographical back-
grounds1 and their ambition to reconcile Max
Weber’s verstehende sociology, Schütz’
520 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
phenomenological analysis of the Lebenswelt
and American pragmatism give their socio-
phenomenologically oriented approach pro-
found academic roots on both sides of the
Atlantic and make it, as Dirk Tänzler puts it,
the ‘heiress and sister of philosophy.’ Despite
their prominent position among sociological
classics, Berger and Luckmann have not
given rise to a specific school of thinking nor
has it been their intention to do so. Apart from
neoinstitutional theory, which was elaborated
mainly in Northern America, in German-speak-
ing interpretive sociology, a particular field of
study has developed in this tradition especially
after Luckmann’s return. Similar to organiza-
tional institutionalism, this field is more a
research community that shares basic assump-
tions and research interests than a formulated
and coherent theory: Luckmann and several
other researchers (e.g. Luckmann 2002 or
2006a; Knoblauch 1995; Knoblauch/
Luckmann 2004; Keller 2005a) have devoted a
considerable part of their oeuvre to analyzing
the role of language and communication in the
construction of reality, a ‘turn’ evidenced by the
labelling communicative or discursive con-
struction of reality. The incorporation of
hermeneutics into the sociology of knowledge
(the hermeneutic sociology of knowledge or
social scientific hermeneutics as it was previ-
ously called) is primarily tied to the work of
Hans-Georg Soeffner (e.g. 1989, 2004), but has
been taken up by several other scholars in the
field (e.g. Schröer 1994; Hitzler/Honer 1997;
Hitzler/Reichertz/Schröer 1999).
Although they have common roots, organi-
zational institutionalism and the German
branches of the new sociology of knowledge
pay very little attention to each other, aside
from cursory cross-references (e.g. Keller
2005a; Tänzler, Knoblauch, and Soeffner
2006a). While recent institutional research is
exploring its common ground with a number
of different theoretical approaches (e.g.
Anthony Giddens’ structuration theory, Pierre
Bourdieu’s concepts of habitus and field, or
Michel Foucault’s discourse theory), the con-
cern for organizations and organization theory
has been of only minor importance in the
otherwise heterogeneous research agenda of
the German sociology of knowledge. In addi-
tion, organizational institutionalism’s often
quantitative research questions and designs are
not easily compatible with a hermeneutic
approach. And last but not least, the language
divide – the German-speaking branches of the
sociology of knowledge are unfortunately
available mostly in only the German language –
prevents the proponents of both approaches
from entering into a proper dialogue.
In this chapter, I hope to make a contribution
to such a dialogue by bringing together the lit-
erature from both currently disparate streams.
The theoretical inspiration that the sociology
of knowledge has provided is still alive in
many of organizational institutionalism’s basic
assumptions and core concepts that have incor-
porated much more of the socio-phenomeno-
logical legacy than might be apparent at first
sight. The most prominent example is, of
course, the overall focus on knowledge and,
thus, on the cognitive dimensions of institu-
tions that has become one of the ‘trademarks’
of neoinstitutional theory, in comparison to
other more normative or regulative strands of
institutional thinking (see Scott 2001). Equally
important are the understanding of what insti-
tutions are and how they operate, the relevance
of legitimacy, the conceptualization of the
process of institutionalization, or the role of
language and symbolism that owe much to this
heritage. In the following sections, I will revive
attention to these roots. However, I am not
tracing solely the historic legacy and impact,
but argue that by rediscovering and renewing
the tie with the phenomenological sociology of
knowledge, institutional theory could gain
much inspiration for theoretical and method-
ological challenges that have dominated the
debate in the last decade and for new directions
in institutional research.
MEANING, KNOWLEDGE AND THE
CONCEPTUALIZATION OF INSTITUTIONS
Many critics of the ‘standard version’ of
organizational institutionalism, especially
 NEW SOCIOLOGY OF KNOWLEDGE
from Scandinavian institutionalism (e.g.
Czarniawska/Joerges 1996; Sahlin-Andersson
1996; Brunsson 1998) or from other interpre-
tively inspired branches of institutional
thinking (e.g. Zilber 2002, 2006; Meyer
2003) have claimed that institutional theory
devotes too much effort to analyzing the tra-
jectories of macro-diffusion patterns while
underestimating the meaning the spreading
practices have in the originating as well as
adopting context and the modifications –
translations – they undergo in the course of
their ‘travels.’ Several of the Scandinavian
scholars, for instance Czarniawska and
Joerges (1996) or Forssell and Jansson
(1996), explicitly draw attention to the work
of Schütz, in particular to his notions of typ-
ifications contained in the social stocks of
knowledge.
One of the central assumptions derived
from the Schützian legacy is that action is
meaningful and that meaning is constituted
through rules that are sprecific to the social
field. To recall, Schütz’s objective was to
give Weber’s interpretive sociology, which
identifies the goal of sociology in the under-
standing of action from the subjective mean-
ing of the actor, a phenomenological
grounding (see especially Schütz 1967). In
his appreciative, yet critical interpretation of
Weber’s work, Schütz highlighted that Weber
had failed to specify the concept of meaning.
In particular, he asked how meaning is con-
stituted by an actor and pointed to the con-
cept’s inherent temporality. He emphasized
the difference between the meaning assigned
by the actors themselves and the meaning
assigned by an observer, and raised the ques-
tion how understanding is at all possible
given the categorical non-accessibility of
another person’s consciousness. The micro-
sociological approach Schütz proposed by
drawing on Husserl’s phenomenology focused
on how ordinary members of a society con-
stitute the everyday world they live in – the
Lebenswelt – and on the conditions and prin-
ciples according to which intersubjectively
shared meaning is constructed and, thus, how
mutual understanding is made possible.
521
Especially with regard to the interactive con-
struction of social meaning and knowledge
(as opposed to the subjective constitution)
and the socialization of individuals, Schütz,
at that time already living in the U.S.,
explicitly drew on the work of American
pragmatists, mainly of George Herbert
Mead, Charles H. Cooley, William James,
and William I. Thomas.
Schütz elaborated that individuals work
with typifications of actions, situations and
persons that are generated in interaction and
communication. They identify typical actors
and identities, recognize typical actions and
assign typical meanings. To interpret and
understand the situation they face, individu-
als need to draw on the recipe knowledge that
is provided by their Lebenswelten.
This ‘social stock of knowledge’ that the
members of a society share to different
degrees is built up (‘sedimented’) from the
experiences of the generations before them
(Schütz/Luckmann 1973). Individuals are
born into a ‘socio-historical a priori’, as
Luckmann (e.g. 1983; see also Soeffner
1989) calls it, that makes available these
institutionalized typifications, frames of
interpretation, actor positions, patterns of
action, etc., and thus delineates the bound-
aries and the ‘horizon’ within which people
can meaningfully act – and beyond which it
is impossible to see or understand: All inter-
ests and preferences, all rationalities, choices
and decisions ever imaginable lie within
these borders; all innovations, crises, shocks
or whatever ‘triggers’ of change we assume
have to be interpreted within this horizon to
be taken into consideration and have impact.
Building on this hermeneutic and phenome-
nological heritage of Schütz’s work,
Czarniawska and Joerges postulate that ‘we
cannot translate what is wholly unrecogniz-
able’ (1996: 28).
Accordingly, the phenomenological
sociology of knowledge is not primarily con-
cerned with questions of epistemology and
methodology, nor with scientific knowledge,
the specialized knowledge of intellectuals, or
the history of ideas and ideologies, but with
522 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
the processes and conditions by which a par-
ticular spatially and historically embedded
social field defines what counts as knowl-
edge and truth – and what does not (Schütz
1962; Berger/Luckmann 1989). The central
object of the hermeneutic reconstruction is
neither to search for a latent macro-structure
that unfolds behind the back of the agents nor
a singular individual perspective. Instead, it
is the social stocks of knowledge that the
acting subjects draw on when constituting
subjective meaning, i.e. the socially
approved typifications available in a concrete
historical socio-cultural Lebenswelt. Thus,
while departing from the Weberian assertion
that the goal of sociology is to understand
action from the subjective meaning assigned
to it, the perspective is nonetheless not
subjectivist but a structure analytic approach
that attempts to reconcile structuralist and
interactionist positions (Soeffner/Hitzler
1994; Reichertz 1999; Soeffner 1989, 2004).
A focus on the cognition of actors and their
stocks of knowledge does not – as is often
brought up against the ‘cognitive turn’ in
organizational institutionalism – necessarily
entail a de-emphasizing of social structure.
Building on this tradition, Berger and
Luckmann have elaborated how shared typi-
fications become institutions through tradi-
tion, sedimentation, and legitimation.
According to them, the reciprocity of typifi-
cations and the typicality of both habitual-
ized actions, in the form of action scripts
and of social actors who are expected to
engage in these patterned actions, lie at the
heart of all institutions – ‘(p)ut differently,
any such typification is an institution’
(Berger/Luckmann 1989: 54). This interac-
tion-oriented and type-based definition is
still central for organizational institutional-
ism. It is mirrored in the early notions of
institutions as ‘frameworks of programs or
rules establishing identities and activity
scripts for such identities’ (Jepperson 1991:
146; see also Meyer/Boli/Thomas 1994) or
as ‘shared rules and typifications that iden-
tify categories of social actors and their
appropriate activities or relationships’
(Barley/Tolbert 1997: 96), and is still being
used as the main reference when it comes to
the definition of institutions or the process of
institutionalization (e.g. Zilber 2002; Dobbin
2004; Dorado 2005; Battilana 2006;
Weber/Glynn 2006). As I will discuss in the
following sections, it has lost none of its rel-
evance in the decades since its publication:
Apart from helping to overcome the concep-
tual ambiguity and to re-establish a common
understanding of what is meant by institu-
tions and institutional processes, a concern
increasingly articulated by scholars, various
facets of the classic conceptualization can
contribute to unsolved issues and current
debates in organizational institutionalism.
(a) Institutions and the construction
of social actors and identities
The reciprocity of the typified, scripted
action and the type of actor who is expected
to perform the script is central to the notion
that institutions are constitutive for social
actors and actorhood and for organizational
institutionalism’s claim against rational
choice models that actors’ preferences and
interests are tied to and do not precede the
institutional order they belong to. Instead of
actors using institutions to foster their indi-
vidual or collective interests, through institu-
tionalization, not only patterns of scripted
interactions are created, but also specific
social categories of actors, whose social
identities, worldviews and interests make
sense only within the sedimented body
of social knowledge that has given shape
to them (Berger/Luckmann 1989). For
instance, Meyer/Boli/Thomas (1994: 18;
see also Meyer/Jepperson 2000 or J. Meyer,
Chapter 34 in this volume) explicitly stress
the close, in fact tautological, link between
script and actor-type:
Both social actors and the patterns of action they
engage in are institutionally anchored. The partic-
ular types of actors perceived by self and
others and the specific forms their activity takes
reflect institutionalized rules of great generality
 NEW SOCIOLOGY OF KNOWLEDGE
and scope. It is in this sense that social reality –
including both social units and socially patterned
action – is ‘socially constructed’ (Berger/
Luckmann, 1966). Institutionalized rules, located
in the legal, social scientific, customary, linguistic,
epistemological, and other ‘cultural’ foundations
of society, render the relation between actor and
action more socially tautological than causal.
Actors enact as much as they act: What they do is
inherent in the social definition of the actor itself.’
The phenomenological heritage is most vis-
ible in John Meyer’s notion of modern social
actors, but it also surfaces in the more recent
institutional interest in the multiple social
identities that are a characteristic of the
late-modern actor (see also Giddens 1991)
and are seen to account for hybridization
and endogenous institutional change (e.g.
Rao/Davis/Ward 2000; Rao/Monin/Durand
2003; Meyer/Hammerschmid 2006; Westen-
holz 2006). In pluralistic societies, multiple
social identities go hand in hand with
multiple reference groups (see below), or as
James (1968: 42) notes, an individual has ‘as
many different social selves as there are dis-
tinct groups of persons about whose opinions
he cares.’ A very similar motif is found in
Luckmann’s recent work: The increasing func-
tional differentiation of society and the frag-
mentation of the Lebenswelt more and more
require the individual to master fragmented
social identities from various specialized insti-
tutionalized domains. As he notes, ‘(l)iving in
society always requires adaption. However,
in later modernity the social structure favors a
particularly high degree of adaptability, not
only of a cognitive but also characterological
nature’ (Luckmann 2006b: 11). This, he
observes, is happening paradoxically at the
same point in history that the display of an
autonomous and individualized self has
become an ‘almost doctrinal obligation for the
modern individual’ (2006b: 8).
(b) Institutional orders, social
control and power
In addition, the reciprocity of typifications of
action and actors points to the substantial
523
borrowing Schütz and the sociology of
knowledge have made from pragmatism:
Being a social actor means to know what is
expected as appropriate in certain situations.
This, in turn, implies a definition of the
situation that is compatible with those of
others involved and rests on the ability of the
actors to take the perspective of the others
(significant and generalized others)
(see Cooley 1964; Mead 1965; Thomas
1967; and Schütz, e.g. 1962). The focus on
the reciprocity of perspectives stresses the
necessity of overlapping relevance systems
and an intersubjectively shared Lebenswelt,
and, thus, of socialization and internaliza-
tion. Successful socialization is the basis for
the fact-like character of social reality and
the degree to which institutions become
taken-for-granted ‘background programs’
(Berger/Kellner 1984). By framing world-
views and perceptions, institutions guide
behavior prior to any visible sanctions. This
creates the image of institutions being taken
for granted and enacted almost naturally.
Internalization mediates between objective
and subjective reality and renders the objec-
tive world subjectively meaningful (Berger/
Luckmann 1989). It is also the moment
where individuals have to actively acquire
specific segments of the social knowledge
and sediment it in a unique way into their
own subjective knowledge. Without paying
enough attention to the complex and
two-way relationship between social and
individual stocks of knowledge, we run
the danger of degrading individuals to
determined ‘cultural dopes,’ or, on the
macro-level, losing the stratified character of
the knowledge distribution of a society and
the related symbolic and structural power
dimensions out of sight.
At least the fundamental institutional
orientations are perceived as fact-like.
Nonetheless, institutions are also supple-
mented by various mechanisms of social
control – positive or negative, material or
immaterial sanctions – to make up for the
incompleteness of all socialization in frag-
mented societies. Individual deviance does
524 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
not unsettle an established institutional order.
A more collective shift towards increasing
reflexivity and attention to institutionalized
patterns or the necessity to safeguard institu-
tions by actually employing the sanctions
provided, however, might be a first indicator
of a commencing deinstitutionalization by
making the contingency of the institutional-
ized patterns apparent (e.g. Berger/Kellner
1984). Although not elaborating the power
and domination dimensions of institutions
explicitly, Berger and Luckmann emphasize
that ‘(i)nstitutions and symbolic universes
are legitimated by living individuals, who
have concrete social locations and concrete
social interests’ (1989: 128) and that the
‘power in society includes the power to
determine decisive socialization processes
and, therefore the power to produce reality’
(1989: 119; emphasis in original). Strikingly
similar, when discussing the need to continu-
ously reproduce institutions, DiMaggio
(1988: 13f.) points out that ‘(a)n important
aspect of institutional work is the socializa-
tion of new participants, which is undertaken
most conscientiously by members with the
greatest stake in the existing institutional
order.’ The social construction of reality is a
power struggle over the definition of the sit-
uation with some interpretations succeeding
over others. For Berger and Luckmann, it is,
finally, the bigger stick and not the better
argument that imposes the definition of real-
ity (1989: 109), which, spun further, points
back to the question of domination. In a later
work, Luckmann highlights again that
although social interaction requires, at least
to a certain degree, reciprocity of perspec-
tives and of relevance systems, this by no
means entails symmetry of relationships but
rather refers to the mutual exchangeability of
perspectives that has to be presupposed even
when fighting. He emphasizes that
reciprocity is not based on equality. The definition
of what is an ‘important’ problem is not essen-
tially the concern of ‘democratic rationality.’ The
solutions are not necessarily devised by ‘equi-
table’ actors. Institutionalization as rational sym-
metric contract can be thought of as a
historically–empirically unlikely marginal case.
Within the ‘constitution analysis’ of institutions,
domination can be bracketed, but not power.
(2002: 113, my translation).
For organizational institutionalism,
DiMaggio (1988) noted almost two decades
ago that there is no conceptual ignorance of
interests and power inherent in the theoreti-
cal scaffolding of the approach. All
institutional order is only a preliminary
achievement and the temporary result of
contest. Power is inextricably woven into
institutional stability and change and institu-
tionalization is a profoundly political
process. Although, in the meantime, the chal-
lenge has been echoed by several scholars
who draw attention to interests, politics and
power struggles not only within established
institutional frames, but particularly in the
processes leading to the definition of what
models, frames, criteria of rationality, subject
positions and interests are appropriate
(e.g. Dobbin 1994; Clemens/Cook 1999;
Hoffman 1999; Fligstein 2001; Lounsbury/
Ventresca 2002; Lounsbury 2003), an
alleged power void has remained among the
most frequently expressed points of criticism
against institutional theory. I do not
have the space to enter into a detailed
discussion, but I hope to have shown that by
taking seriously the question of what counts
as knowledge and what doesn’t, as well as
the processes and mechanisms by which this
is defined in a society (Schütz 1962), institu-
tional theory has the potential to address all
faces of power and domination. If they do not
receive due attention, it is our current
research foci that distract us and not short-
comings of the conceptual framework.
(c) Institutional and organizational
fields
Apart from the constitution of actors and
attention to power and domination, the con-
ceptualization of institutions in the tradition
of the phenomenological sociology of
knowledge could also help to come to terms
 NEW SOCIOLOGY OF KNOWLEDGE
with the ambiguity in the use of the concept
of ‘field.’ Reciprocity of perspectives
requires that institutionalized practices be
directed to some reference group (e.g.
Shibutani 1962) or ‘collective audience’ (e.g.
Suchman 1995) that shares the stock of
knowledge and is entitled to assess the
appropriateness and endorse legitimacy, in
short, ‘whose presumed perspective is used
by an actor as the frame of reference in the
organization of his perceptual field’
(Shibutani 1962: 132; italic in original).
The definition of fields as connoting actors
that partake in common meaning systems
and share cultural-cognitive or normative
frameworks (e.g. Scott 1994: 207f.) is
closely related to this understanding. Since
one of the core characteristics of institutions
is their ability to bridge time and space, in
this sense fields connect actors beyond their
temporal and spatial co-presence. The
second part of Scott’s seminal definition –
‘whose participants interact more frequently
and fatefully with one another than with
actors outside of the field’, however, draws
attention to network structures and interac-
tion ties that do require some kind of spatial
and temporal co-presence (see e.g. Giddens
1984 and his distinction between social and
system integration).
In order to disentangle the multiple
notions of field that currently inform institu-
tional research, I believe it would be helpful
to distinguish the two aspects analytically. In
current studies, the terms ‘institutional field’
and ‘organizational field’ are generally used
synonymously. I suggest using ‘institutional
field’ to demarcate spheres of institutional-
ized meaning and ‘organizational field’ in
order to refer to network ties between con-
stituents that directly and indirectly interact
with each other. They are both equally
relevant and, in most empirical studies, inter-
twined, but encompass different phenomena:
Institutional fields focus on shared typifica-
tions and mutual expectations and can
provide insights into how institutional orders
expand or contract or into how institu-
tional logics, institutionalized practices and
525
rationalizations or legitimations differ across
time and/or space. They encompass not only
those actors who are expected to perform
an institution, but include all those who
expect the institution to be performed,
that is, all actors who share the frame of ref-
erence. Institutional fields make homogene-
ity or heterogeneity of meaning and
interpretations without institutionalized
orders, forms and practices visible (see e.g.
the research on translation or editing
processes, Czarniawska/Joerges 1996,
Sahlin–Andersson 1996) as well as the distri-
bution of knowledge, subject positions and
power inherent in institutions. Moreover,
assuming that the borders of institutional
fields are floating, the center(s) and periph-
eries of institutional orders could become
observable (I thank Kerstin Sahlin for this
point) – not only temporally, spatially/geo-
graphically or relating to life-spheres, but
also in terms of the institutional order’s
strength or exclusiveness to define situations
(see below), i.e. the extent of taken-for-
grantedness, or – with regard to the inner
composition – in terms of the various mani-
festations of institutional orders (i.e. central
beliefs/institutions or peripheral beliefs/insti-
tutions). Apart from pointing to new research
directions, this could also contribute
to a more systematic approach to our
current research on institutional change.
Organizational fields focus on the degree to
which a field of actors is characterized by a
single predominant or by multiple, poten-
tially competing institutional orders or
logics. They draw attention to the hetero-
geneity of institutionalized patterns and
interpretation frames in interaction fields. In
a similar sense, social movement literature
identifies ‘multiorganizational fields’ as
complex, structured fields in which individ-
ual and collective actors in changing systems
of alliances and conflict try to mobilize con-
sensus for their claims (Klandermans 1992).
Similarly, in the neoinstitutional tradition,
Hoffman (1999) defines fields as ‘centers of
debates in which competing interests negoti-
ate over issue interpretation.’
526 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
ACTION AND INSTITUTIONAL
ENTREPRENEURS
The failure to adequately account for active
agents has for a long time been criticized as
one of organizational institutionalism’s
weakest points, even by the theory’s propo-
nents (e.g. DiMaggio 1988; Beckert 1999;
Mutch/Delbridge/Ventresca 2006). In the fol-
lowing section, I will draw attention to two
aspects where organizational institutionalism
could greatly benefit from a re-engagement
with the Schützian socio-phenomenology:
the general notion of action on the one
hand and the conceptualization of institu-
tional entrepreneurs and institutional work
on the other.
Building on Weber as well as the philo-
sophical approaches of Henri Bergson and
Edmund Husserl, Schütz (see especially
1967) developed the phenomenology in the
direction of an action theory that centers
upon the meaningfulness of action in gen-
eral. He takes as a starting point the inten-
tionality of consciousness (i.e. consciousness
is always directed to some object) and the
inherent temporality of all constitution of
meaning. Action differs from passive experi-
ences (i.e. reflexes) and spontaneous activi-
ties (i.e. to perceive a stimulus from the
environment), insofar as it has a guiding
project. For Schütz, action is any meaningful
experience that is orientated towards a future
state of affairs (in this sense, not picking the
phone up is just as much an action as picking
it up). In the action design, the individual
imagines the action to be completed in the
future (‘modo futuri exacti’). Schütz points
out, that ‘we are conscious of an action only
if we contemplate it as already over and done
with, in short, as an act. This is true even of
projects, for we project the intended action as
an act in the future perfect tense’ (Schütz
1967: 64, emphasis in original). Social action,
and, in particular, interaction, does not merely
include this projection, but rather a reciprocal
orientation towards another agent and is
situated in concrete socio-historical contexts.
The interactive dimension of this reciprocal
orientation is encompassed in the project of
the agents but also in the actual course of the
interaction.
Schütz distinguishes between two differ-
ent kinds of motives: The ‘in-order-to
motive’ is reflected in the action project and
in the outcome that the agent imagines. The
primary subjective meaning assigned by an
individual corresponds to this ‘in-order-to
motive.’ The ‘because-of motives’ reveal
why agents define the situation and design
the action the way they do. Thus, while the
‘in-order-to motive’ is future-oriented and
only fully comprehensible to the agent alone
(due to the inaccessibility of consciousness),
the ‘because-of motive’ can only be recon-
structed by analyzing the action context and
individual’s past, i.e. the socio-historical a
priori of the Lebenswelt and the individual
biography. In this reconstruction, the actor
has no privileged access compared to an
observer. The distinction between the two
kinds of motives bridges the dichotomy
between oversocialized, determined ‘cultural
dopes’ and undersocialized atomistic agents’
free will: Individuals, in their biograph-
ical uniqueness of different sedimented
experiences and different layers of sedimen-
tation that result from the temporality of all
these experiences, are never free from the
socio-historical a priori of the established
institutionalized order into which they are
born, but equally never determined. While
the ‘in-order-to motives’ reflect the freedom
to chose and decide, the ‘because-of motives’
show the choices, decisions and interests that
are historically and situationally available
within the agent’s horizon of meaning and
from their actor position.
Drawing more explicitly on Mead and the
pragmatists, but also on the socio-phenome-
nology of Schütz, Emirbayer and Mische
(1998), whose contribution – which they
refer to as ‘relational pragmatics’ – received
much attention in the recent institutional the-
orizing about agency (e.g. Battilana 2006;
Mutch et al. 2006). They distinguish between
three temporal dimensions of agency – an
 NEW SOCIOLOGY OF KNOWLEDGE
iterational (informed by the past), a projec-
tive (oriented towards the future) and a prac-
tical-evaluative (situationally contextualized)
dimension – which, as they argue, dynami-
cally interact in each instance of action. They
stress that they do not denote different types of
action, but only analytically different
elements, and that, depending on context and
actor, one or the other dimension may be
predominant (Emirbayer/Mische 1998: 972).
According to them, situated actors assume
variable temporal ‘agentic orientations’ in
relation to the different action contexts they
face and may switch between these orienta-
tions more or less reflexively. In contrast to
these agentic orientations, in the Schützian
conceptualization, the inherent temporality
that simultaneously encompasses future, past
and present is a definitional component of all
social action and, thus, a constitutive charac-
teristic. In this conceptualization, the specific
orientation of an agent, no matter in what
temporal direction, finds expression in the
agent’s project of action, i.e. their
‘in-order-to motives.’ Therefore, projectivity
may encompass the creative reconfiguration
of structure or may equally entail their mainly
routine incorporation into activities. In this
sense, it is an interesting question, why cele-
brated modern actorhood is so frequently
linked to future- and change-oriented action
projects framed as ‘entrepreneurial,’ while
projects that reflect past–oriented traditional-
ism are not highly appreciated (for a similar
point see Hwang and Powell 2005).
In the socio-phenomenological tradition,
meaning is an achievement of an individual’s
consciousness and consciousness is inten-
tional (Schütz 1967). Thereby, it is of little
relevance whether the future state projected
by the individual is actually realized or
whether something completely different
occurs. Moreover, the subjective meaning
may change several times as the course of the
(inter)action unfolds. In addition, the mean-
ing assigned retrospectively when the agent
is reflecting over the finished act is very
likely different from the primary meaning
assigned to the project. Luckmann (2006a,
527
my translation) highlights this intentionality
and meaningfulness inherent in all action:
Social reality presupposes intentional activities.
Social worlds are constructed, maintained, trans-
mitted, transformed and, occasionally, destroyed
through social action that is meaningful to those
who engage in it. Interactions are meaningful
when they lead to results that were intended by
them. But they are equally meaningful in another,
often painful sense, when the consequences of the
action differ from those originally intended. Action
is meaningful, whether the bridges and the mar-
riages that were built for eternity, last or don’t.
(2006a: 20f.)
To insist that all action is intentional and
meaningful entails that all actions – no
matter to what degree individuals rely on pre-
given routines – are projected and comprise
‘in-pre-given order-to motives.’ Thus, even
when enacting highly taken-for-granted insti-
tutionalized scripts, they assign subjective
meaning and project some finished act into
the future (but see Jepperson 1991). Through
their actions, institutional patterns are main-
tained or transformed, sometimes as intended
and sometimes institutions erode because
they cease to make sense. However, this
intentionality and projectedness does not
mean that all action is strategic in the sense
of rational choice theory or that different
alternatives are weighed against each other in
a utilitarian way according to individual
preferences.
Institutions, by definition, denote a certain
durability. However, this emphasis on the sta-
bility provided by institutions has to be seen
in the context of the ever-present fragility of
all order. Berger and Luckmann (1989: 103)
underscore that ‘(t)he legitimation of the
institutional order is also faced with the
ongoing necessity of keeping chaos at
bay. All social reality is precarious. All
societies are construction is the face of
chaos.’ Hence, the existence of order – on the
macro-level of society, the micro-level of
interaction as well as on the individual level
of identity construction – cannot be taken for
granted but is an ongoing achievement of the
agents involved. Its reproduction and trans-
formation are equally fragile. The focus on
528 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
the precariousness of order is shared with the
negotiated order approach to organizations
(e.g. Strauss 1978; Maines/Charlton 1985;
Fine 1996) – an approach that builds on
pragmatism and symbolic interactionism as
well as the work of Everett C. Hughes,
another forefather of neoinstitutionalism (see
e.g. Zucker 1977; Scott 2001), but is mostly
neglected in organizational research (for an
exception see e.g. Hallett/Ventresca 2006;
Walgenbach/Meyer 2008). Strauss stresses
that social order is maintained in continuous
processes of negotiating reality. For him
(1978: ix) ‘rules and roles are always
breaking down – and when they do not, they
do not miraculously remain intact without
some effort, including negotiation effort, to
maintain them.’
In organizational institutionalism, the
insight that not only the primary establish-
ment or the transformation of institutions
involves signifying activities, but that also
the routine reproduction requires continuous
efforts has led to renewed empirical and the-
oretical interest in ‘institutional entrepre-
neurs’ – actors with sufficient resources who
see new institutions as an opportunity to real-
ize interests that they value highly
(DiMaggio 1988: 14; see also Dorado 2005;
Battilana 2006; Greenwood/Suddaby 2006)
– and ‘institutional work’ – ‘the purposive
action of individuals and organizations
aimed at creating, maintaining and disrupting
institutions’ (Lawrence/Suddaby 2006: 218;
see also DiMaggio 1988; Fligstein 2001).
From these short definitions, it is evident that
the concepts are not intended to provide gen-
eral conceptualizations of actors and action,
but to denote specific types. Hwang and
Powell (2005) identify a discomforting infla-
tionary growth in the usage of the term
‘entrepreneur’ and a more general trend to
label all sorts of activities as entrepreneur-
ship that they link to essentially modern, yet
under-analyzed, conceptions of empowered
individuals. For institutional entrepreneurs to
be an endogenous explanation of change, it is
necessary to give the concept a firm institu-
tional grounding. I suggest that drawing on
the Schützian concept of social action could
contribute to such a foundation.
As they are referring to specific types, the
central questions in this context obviously
are how we identify institutional entrepre-
neurs and institutional work and in what
respect they differ from other actors and their
actions. One option would be to tie the iden-
tification to the outcome, i.e. to institutional
change. However, this would be highly
problematic for several reasons: First, as
Sahlin-Andersson and Engwall (2002) have
highlighted, the relationships between actor,
activities, interests and institutional change
are often much more indirect. They conclude
that ‘(t)he institutional entrepreneur is only
one type of actor that is important in the
processes of institutional change’ (2002:
294). While change may emerge without
much effort from those individuals who,
often retrospectively, get filtered out as
initiators, it might take just as much
resources and work to stabilize an institu-
tional arrangement against opponents as it
would to initiate new procedures. However,
to tie the identification of institutional entre-
preneurs and work to the necessity of defeat-
ing resistance or the potential or even the
willingness to do so, would inevitably
directly lead into a ‘multiple faces of power’
debate (Bachrach/Baratz 1962; Lukes 1974;
Clegg 1989) and the argument that any insti-
tutional explanation has to be especially sen-
sitive to all variations of structural and
symbolic power that is prevalently mani-
fested in the absence of any visible form of
resistance.
Drawing on the different kinds of motives
Schütz distinguishes could offer a promising
option to embed the institutional entrepre-
neur within a more general conception of
action and provide criteria for the identifica-
tion of the type. I believe that it would be in
the spirit of the research building on
DiMaggio (1988) to use the term for agents
whose action projects and subjective
meanings (i.e. their ‘in-order-to motives’) are
directed towards the institutional framework
(both future- and change-oriented as well as
 NEW SOCIOLOGY OF KNOWLEDGE
past- and stability-oriented). I interpret the
‘purposive’ in Lawrence and Suddaby’s defi-
nition as leading the same way.2 Whether
they succeed or fail, whether they sponsor
stability or change, is a different question, as
is, by the way, the methodological challenge
of coming to terms with the temporality of
the subjective meaning and the categorical
non-accessibility of consciousness in con-
crete empirical research designs. To endoge-
neously account for their specific resources
and to explain how they come to have diver-
gent interests and define the situation in a
way that they see a window of opportunity
requires the incorporation of the related
‘because-of motives’, i.e. the socio-historical
Lebenswelt with its institutionalized knowl-
edge and the specific (inter)action context,
into the analysis.
THE PROCESS OF
INSTITUTIONALIZATION REVISITED
Another prominent example of Berger and
Luckmann’s influence on the body of organi-
zational institutionalism is the notion of insti-
tutionalization as a process in which, through
repetition, routinization and transmission,
ephemeral interactions become objectified
patterns, and meaning, originally constituted
by the individual consciousness, becomes
part of the socio-historical a priori. This
notion is explicit in the conceptualization of
advancing institutionalization as sequence of
the stages of habitualization, objectivation,
sedimentation (Zucker 1977; Tolbert/Zucker
1996; Colyvas/Powell 2006) and implicitly
implicated in studies that regard the broad
diffusion or increasing density of some struc-
ture or practice within a field as an indicator
for increasing legitimacy – the currently
dominant model for empirically analyzing
institutionalization. Recently, scholars have
started to question the comprehensiveness of
this model (e.g. Sahlin-Andersson 1996;
Benford/Snow 2000; Campbell 2004; Meyer
2004; Lawrence/Suddaby 2006). A closer
529
look at the original conceptualization sup-
ports the skepticism: First, in the new sociol-
ogy of knowledge, the three moments of the
dialectical process of reality construction are,
as is well known, externalization, objectiva-
tion (part of which are the sedimentation of
meaning in a social sign system and its insti-
tutionalization) and, finally, internalization.
The transmission to a third person who was
not involved in the creation – no further
quantitative spread – is required to complete
the process of institutionalization. Secondly,
the meaning of a form or practice is stressed
on both the level of the individual actors who
have to make sense of the situations they face
and the level of society as a whole by linking
institutionalization to some kind of societal
problem.
The enactment of scripted action is tied to
certain types of actors, i.e. prevalence of a
certain already institutionalized practice is to
be expected among actors belonging to the
same social categorization. Thus, the ques-
tion how far a practice can be expected to
spread in terms of actors who perform it or
situations in which it is to be displayed is
dependent on the typification. Some institu-
tions are frequently performed by many
members of a society (e.g. institutions relat-
ing to meeting and departing, introducing,
etc.); some are enacted by most members
but, in general, only infrequently (e.g. insti-
tutions relating to birth or death). Others do
not imply at all that the practices in question
spread quantitatively (such as institutions
relating to the succession of kings, presidents
or the Pope). Prevalence within a social
category does not entail a quantitatively wide
spread of a form or practice if only a few
actors are classified as belonging to this cat-
egory, no matter how deeply taken for
granted and widely shared the institution
might be. Hence, neither is the absence of a
wide diffusion indicative of the concept’s
lack of legitimacy, nor is the spread an indi-
cator for the size of the institutional field.
Moreover, the observation of a practice or
form spreading might denote its primary
institutionalization or its translation for other
530 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
types of actors or situations, i.e. the expan-
sion of the institutional field’s boundaries.
Without understanding the meanings of a
concept it is impossible to figure out what we
are actually observing. Presence or absence
of quantitative diffusion of forms of practices
is too ambiguous to be taken as a measure of
institutionalization. In addition, a wide
spread in a quantitative sense is not equiva-
lent to a high degree of institutionalization,
as has often been shown with regard to
management fashions. The sociology of
knowledge, particularly research on
Deutungsmuster (e.g. Oevermann 1973,
2001; Meuser/Sackmann 1992), a concept
that is closely related to Goffman’s frames
(1986), links the strength of social expecta-
tions to the exclusivity with which they
encompass situations (see also Goffman
1961, on total institutions) and, thus, their
degree of latency (Lüders/Meuser 1997)
which may range from reflexive availability
to the complete taken-for-grantedness that
characterizes the most powerful typifica-
tions. Thus, culturally powerful institutions
are almost naturalized and drawn close to
instincts (Douglas 1986; see e.g. Schütze’s
[1991], interesting analysis of the historical
transformations of ‘motherly love’). A high
degree of latency makes it impossible for
individuals to ignore the institutionalized
expectations, as they are compelling even for
those who deliberately try to defect. They,
too, have to actively make reference, for
example by feeling the urge to account for
their non-compliance (e.g. Elsbach 1994), by
pretending to adhere or by employing decou-
pling strategies (Meyer/Rowan 1977; Oliver
1991) or simply by feeling guilty. From this
perspective, decoupling and symbolic
window-dressing activities, merely rhetorical
adoptions of practices, etc. are not necessar-
ily antagonistic to institutions (but see
Tolbert/Zucker 1996). On the contrary, they
might point to socially powerful expectations
that can not be neglected. The severity with
which the disappointment of social
expectations is sanctioned evidences the
institution’s relevance and centrality.
Organizational institutionalism has
devoted much attention to show how prac-
tices get institutionalized, maintained or even
deinstitutionalized. Very little attention has
been dedicated to why they do. From a
European’s perspective, this might be a con-
sequence of the anxiety of many North
American scholars to get into the vicinity of
functionalist explanations (for the relation-
ship between Schütz and Parsons see their
correspondence edited by Grathoff 1978).
The sociology of knowledge ties the
existence of institutions or new institutional-
izations to the social approval of a situation
as inherently problematic. In Berger and
Luckmann’s words (1989: 69f.), ‘(t)he trans-
mission of the meaning of an institution is
based on the social recognition of that insti-
tution as a “permanent” solution of a
“permanent” problem of this collectivity.’
Institutions are challenged if they cease to be
seen as solutions or if the situation is no
longer regarded as problematic, or, the argu-
ment turned around, if institutions persist, we
can assume that they continue to reply to a
societal problem, which, however, is not nec-
essarily the original one (Soeffner in
Reichertz 2004), nor does this say anything
about a ‘rationality’ of this solution. Thus,
not merely the spread of institutions, but
rather the question of which societal problem
the actors defined and attended to is of cen-
tral concern. Societies only stabilize
important forms of action, and, on the macro-
level, the societal relevance system can be
inferred from the repertoire of existing
institutions (the ‘institutional economy’,
Luckmann 2002). This emphasis on the close
linkage between institution and context
accounts partly for the heterogeneity of insti-
tutions and for the observation that concepts
and their theorizations cannot be trans-
ferred ‘wholesale’ from one social sphere to
the next. In Soeffner’s words (2006, my
translation),
(t)hey are all historical plants that owe their
appearance to the cultural landscapes and regions
in which they have grown. Their soil and their
nourishment are the particular problems of
 NEW SOCIOLOGY OF KNOWLEDGE
concrete societies, times and situations. They are
the concrete answers to concrete problematic situ-
ations, that is, concerning their content and phe-
notype, they are bound to specific socio-historical
contexts and are inexchangeable – unless they be
transferred with political and/or ideological power
and continuous surveillance from one culture to
the other, superseding this culture’s representa-
tions of order or pushing them into the back-
ground. (2006: 64)
Again, there are obvious similarities espe-
cially to research conducted in the tradition
of the Scandinavian institutionalism on trans-
lations and editing processes, but also to
studies on contesting institutional logics (e.g.
Reay/Hinings 2005) or on framing processes
(e.g. Benford/Snow 2000). In addition to this
overlap of research questions, the sociology
of knowledge provides a rigorous repertoire
of hermeneutic procedures to be used in
empirical analyses that follow strict rules of
interpretation and documentation and war-
rant a ‘monitored and controlled understand-
ing’ (Soeffner 2004; see also e.g. Soeffner
1989; Flick/von Kardoff/Steinke 2004; for an
English-speaking example in organiza-
tion research see Lueger/Sandner/Meyer/
Hammerschmid 2005). This could contribute
considerably to enhancing the appreciation
for qualitative research methods in organiza-
tional institutionalism.
LANGUAGE, DISCOURSE AND
COMMUNICATIVE INSTITUTIONS
Language is a main focus in current research,
both in organizational institutionalism and in
the phenomenological sociology of knowl-
edge. Institutionalization, apart from the
transmission from one generation to the next,
is bound to social knowledge that is intersub-
jectively available through its sedimentation
in all sorts of symbol systems. Language
plays a crucial role in several respects: It is
the most important sign system and
‘reservoir’ of typifications and institutional
knowledge, although by no means the only
one. Artefacts, such as factories or churches,
531
jewellery, clothes or graves, or rituals are
other forms in which social knowl-
edge is sedimented. Further, language is the
prime instrument for the transmission of
knowledge, thus, for socialization and inter-
nalization. Moreover, the mobilization of
legitimacy is a mainly discursive process.
Berger and Luckmann (1989: 64) stress that
‘the edifice of legitimation is built upon lan-
guage and uses language as its principal
instrumentality.’ In a later publication,
Luckmann (2006: 22, my emphasis and
translation) asserts that, although it would be
too narrow to confine knowledge to discur-
sive knowledge and all human praxis to com-
municative interactions, ‘the human social
world is at least mainly constructed in com-
municative interaction.’ Just like every other
form of social action, communicative actions
also get habitualized and institutionalized.
This requires looking beyond the actual con-
tent of communication and examining the
formats in which it is produced – the commu-
nicative genres (Luckmann 2002, 2006a;
Knoblauch 1995; Knoblauch/Luckmann
2004). Genres, such as jokes, greetings,
prayers, job interviews, emails, exams, par-
liamentary speeches, performance appraisal,
or gossip are more or less obligatory interac-
tion patterns that are available to actors as
part of the social knowledge stocks. The sta-
bilization of communication into genres
serves the same purpose as institutionaliza-
tion in general. It ‘frees the individual from
the burden of “all those decisions” ’
(Berger/Luckmann 1989: 53). Genres give
orientation and help in coordinating
and structuring interaction by providing
typical expectations with respect to the
synchronization of actors and by standardiz-
ing the interaction sequences. They are
the ‘communicative institutions’ of a par-
ticular society, and, taken together, constitute
a society’s ‘communicative economy’
(Luckmann 2002).
In organizational institutionalism, lan-
guage and symbolism have always had a
central role – too central in the eyes of some
critics (e.g. Perrow 1985). Here, a focus has
532 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
been on the availability of accounts that
actors do not have to invent anew when
trying to legitimate their proceeding, but that
come ‘ready-made’ with the theorization of
the concepts in question (e.g. Meyer/Rowan
1977, Strang/Meyer 1993; Elsbach 1994;
Lounsbury/Glynn 2001; Creed/Scully/Austin
2002; Meyer 2004; Suddaby/Greenwood
2005). Zucker (1977: 728) points out that
when acts have ready-made accounts, they
are institutionalized. Scott and Lyman (1970:
93), who had a strong impact on organiza-
tional institutionalism’s understanding of
accounts, explicate that they introduced the
concept in order to bring together Schütz’s
emphasis on taken-for-granted social recipes
‘everyone knows’ and C. W. Mills’ (1940)
‘vocabularies of motive.’ The repertories of
such ‘vocabularies of motive’ are distributed
within a field according to social position
and identity, and, thus, are tailored for spe-
cific categories of actors to use in typical sit-
uations. In the terminology of the
phenomenological sociology of knowledge,
they are ready-made because they are part of
the socio-historical a priori (Luckmann
2006a).
More recently, a number of institutional-
ists have suggested drawing on discourse
analysis (e.g. Phillips/Lawrence/Hardy
2004) or rhetorical analysis (e.g. Suddaby/
Greenwood 2005) to strengthen the micro-
foundation of institutional processes. In
order to overcome the micro-bias and to
encompass the ongoing political processes
related to the production, circulation, trans-
formation and manifestation of knowledge at
the meso- or macro-level, researchers in the
tradition of the hermeneutic sociology of
knowledge (e.g. Keller 2005a, 2005b;
Keller/Hirseland/Schneider/Viehöver
2001, 2005) also direct attention to
discourses as analytic devices. Keller
(2005a) suggests integrating the work of
Gusfield (1981), the social movement
research particularly in the tradition of
Gamson (e.g. Gamson/Modigliani 1989)
and, further, Foucault’s discourse theory into
the phenomenologically oriented sociology
of knowledge. The replacement of the com-
municative construction of reality with a
discursive is meant to underscore this
emphasis.
It is evident that especially the commu-
nicative and discursive strands of the sociol-
ogy of knowledge have amazing overlaps
with the current agenda of organizational
institutionalism and could contribute consid-
erably to future research. In the context of
organizational studies, communicative
genres as social institutions have been ana-
lyzed, e.g. by Yates and Orlikowski (1992),
who, building on rhetorical theory and
Giddens’ structuration theory, come to a
strikingly similar definition of a genre as ‘a
typified communicative action invoked in
response to a recurrent situation’ (Yates/
Orlikowski 1992: 301). In organizational
studies, interesting new genres abound (e.g.
emails, homepages, sustainability reports,
hearings, accreditation reports). Like all
institutions, genres attend to fundamental
and recurrent communicative problems that
are typical for a particular field. Since these
problems and the socially approved way to
attend to them are own to a specific field, dif-
ferent communities use different commu-
nicative economies (Luckmann 2002) or
genre repertoires (Orlikowski/Yates 1994),
and like all institutionalized forms, genres
can not travel from one social context to the
next without translation or editing activities.
Not only are genres closely related to institu-
tionalized contexts, but often they are also
constitutive of them, that is, these contexts
‘may actually be defined through the use of
such genres’ (Knoblauch/Luckmann 2004:
306). Changes in the communicative econ-
omy of a field are, thus, indicative of trans-
formations of institutional regimes or logics.
Many of the analyses of the spread of new
institutional logics into other fields focus on
language and it would be interesting to read
them in terms of the involved genres, e.g.
Oakes, Townley, and Cooper’s (1998) analy-
sis of how the use of business plan in a public
organization facilitated the shift from a cul-
tural to an economic rationality. In addition,
 NEW SOCIOLOGY OF KNOWLEDGE
it could be interesting to see if the different
types of institutional work (Lawrence/
Suddaby 2006) or legitimating efforts
(Suchman 1995) rely on or constitute differ-
ent genres, i.e. if the use of particular genres
can be seen as a cue for institutional entre-
preneurs at work, or to see how the global
diffusion of rationalization according to the
world polity approach (e.g. Meyer 2005) is
displayed in the communicative economies.
CONCLUSION
Organizational institutionalism and the
various branches of the German-speaking
sociology of knowledge share roots in the
phenomenologically inspired Social
Construction of Reality. My intent in this
chapter was to assume an institutional stand-
point and look over the fence to see what
could be gained by reopening a dialogue.
I have shown that neoinstitutional theory’s
main concepts still bear a strong socio-phe-
nomenological imprint, even if this heritage
has somewhat become the status of tacit
assumptions. I have argued that in terms of
core conceptualizations, such as agency,
meaning, social and individual knowledge,
or Lebenswelt, for a phenomenologically
inspired approach like organizational institu-
tionalism it is impossible to look back
beyond the work of Alfred Schütz. A firmer
grounding in his tradition could help to over-
come the conceptual ambiguity that is cur-
rently being criticized by many of the
theory’s proponents. I have outlined that,
apart from the historical legacy, many of the
current research questions overlap with the
work done in the German-speaking sociol-
ogy of knowledge and have examined poten-
tial contributions the socio-phenomenology
can make to current debates. I have shown
that several of the current challenges do not
require organizational institutionalism to
‘import’ concepts from other theoretical
traditions; important impulses and potential
new directions could be gained from
533
revisiting its own conceptual background and
from a closer engagement with the
socio-phenomenological tradition. For exam-
ple, a closer adherence to the sociology of
knowledge could help disentangle diffusion
research and the analyses of institutionaliza-
tion processes, overcome the power and
agency void, or refocus attention on one of
organizational institutionalism’s core
strengths – stability that is accomplished
amid ever changing situations and constella-
tions of agents after more than a decade of
preoccupation with change and heterogene-
ity. In addition, we are reminded of other
symbol systems besides language (e.g. arte-
facts, design, buildings, architecture, etc.)
that transport institutional knowledge. For
example the relevance of ‘locales’ for the
evoking of institutional patterns is still
underemphasized in institutional research.
Further, an engagement with the distribution
of knowledge on the level of the field
relates sedimentation to discrimination and
opens the view on institutionalized knowl-
edge/power structures and domination.
Finally, particularly with regard to a potential
‘discursive turn,’ the sociology of knowledge
with its focus on genres and knowledge
regimes has a much more ‘indigenously’
institutionally anchored agenda than institu-
tional theory presently seems to have.
ACKNOWLEDGEMENTS
For helpful discussions and conversations
and insightful comments on earlier drafts of
this chapter I would like to thank Markus
Höllerer, Peter Leisink, John Meyer, Kerstin
Sahlin, Roy Suddaby and Marc Ventresca.
NOTES
1 Peter L. Berger and Thomas Luckmann both
have Austrian roots as well as Alfred Schütz, who
had to leave Austria in 1938.
534 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
2 Similarly, coming from the social movement
research, Snow and Benford (2000: 624) conceptual-
ize their frame alignment processes as ‘(s)trategic
efforts by SMOs to link their interests and interpretive
frames with those of prospective constituents and
actual or prospective resource providers’ and
Klandermans (1988) distinguishes ‘consensus mobi-
lization’ (the ‘deliberate attempt by a social actor to
create consensus’) from ‘consensus formation’
(‘unplanned convergence of meaning’).
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Systems Theory, Societal
Contexts, and Organizational
Heterogeneity
Raimund Hasse and Georg Krücken
INTRODUCTION
From the outset, attention to the embedded-
ness of organizations in wider societal con-
texts has been a trademark of the new
institutionalism in organizational analysis.
Different strands of neo-institutional analy-
sis converge in continuing this Weberian
approach to the study of organizations by
focusing on the co-evolution of organiza-
tions and their societal environments. This
general point of departure is shared by
both the macro-sociological and the
inter-organizational perspectives on organi-
zations. The former, which has been elabo-
rated by John Meyer and his students,
assumes that organizations are shaped by
the broader social and cultural forces of a
global society. The latter, which has
become most prominent in the concept of
organizational fields, sees organizational
behavior as intimately bound to other organ-
izations in their field. Both approaches
differ with regard to many aspects, most
notably the level of abstraction and
22
the role attributed to organizational agency.
Nevertheless, they both lead to an overem-
phasis on homogeneity and convergence,
triggered by world societal forces or by
those forces operating within an organiza-
tional field. As organizational research has
increasingly begun to question this overem-
phasis and to allow for more heterogeneity
and variety, more and more neo-institu-
tional scholars have looked for conceptual
remedies against this bias. The concept of
the institutional entrepreneur seems to play
a crucial role here, as it helps explain why
organizations which operate under the same
circumstances do not always become simi-
lar. By focusing on the micro-level of indi-
vidual actors, however, the basic feature of
the new institutionalism in organizational
analysis, i.e., the analysis of interrelations
between organizations and their broader
societal environments, becomes less pro-
nounced. We clearly see both the necessity
of allowing for more heterogeneity and vari-
ety in neo-institutional research and the con-
ceptual problems revolving around analyses
540 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
highlighting the role of institutional entre-
preneurs. Therefore, we would like to pres-
ent a macro-sociological alternative to the
currently debated micro-level approach to
heterogeneity and variety.
In contemporary European macro-socio-
logical theories, the argument that modern
society can only be perceived as being com-
posed of different, at times conflicting
spheres, and not as a homogeneous set of
principles is well established. Pierre
Bourdieu has distinguished between different
societal fields (for example, economy, educa-
tion, arts, mass media, and politics). Albeit
these fields may both overlap and be
composed of diverse subfields, they are
characterized by distinct norms, values, and
rationalities. Bourdieu’s fields are conceptu-
alized as arenas for competition whose ‘rules
of the game’ can be modified by powerful
actors. It is important to notice, however, that
success in one field cannot easily be trans-
lated into other fields. In his much cited book
Distinction: A Social Critique of the
Judgment of Taste (Bourdieu 1984), these
limits to convertibility become obvious as
Bourdieu delineates cultural barriers to the
new rich, whose possession of economic
capital does not lead to a similarly developed
distinction of taste. Not unlike Bourdieu,
Anthony Giddens (1984) has distinguished
between different social institutions based on
their modularities of structuration. Specific
combinations of rules and resources consti-
tute political, economic, legal and other
institutional domains on the societal macro-
level. Though Bourdieu and Giddens could
be of great help in developing a theoretical
perspective for organizational institutional-
ism, in which differences, not homogeneity
on the societal level are highlighted, we will
focus on Niklas Luhmann’s systems theory
for this purpose.1 Luhmann has placed a
much greater emphasis than the other authors
on the fact that modern society is defined
through autonomous, functionally differenti-
ated societal systems (economics, science,
politics, religion etc.), which follow a very
distinct logic (Luhmann 1995, 1997).
To point out precisely this characteristic of his
theory, an American collection of some of his
articles appeared under the title The
Differentiation of Society (1982). In addition,
and in contrast to Bourdieu and Giddens,
from his early writings up to his later work
Luhmann has also been an organizational
sociologist (Luhmann 1964, 2000). According
to Luhmann, modern society can only be fully
understood when taking into account the
expansion of formal organizations – in all
societal systems over time and on a global
scale (see Hasse/Krücken 2005b).2
We would like to develop our argument in
four steps. First, we will reconstruct both the
macro-perspective and the field approach in
neo-institutionalism. According to our analy-
sis, they both lead to a similar overemphasis
on homogeneity. Only in this context can the
search for concepts allowing for heterogene-
ity and variety be understood. As we will see
at the end of part 1, the neo-institutional
figure of the institutional entrepreneur could
be seen as a result of that search process.
Second, we will reconstruct Luhmann’s per-
spective on society with its strong emphasis
on differences between societal systems. As
we will argue, from this perspective modern
society can only be reconstructed as a multi-
dimensional project. This orientation could
counterbalance both the bias towards
convergence inherent in neo-institutional
analysis and the recent emphasis on institu-
tional entrepreneurs. Third, and in order to
fully grasp the interrelatedness of societal
and organizational trajectories in Luhmann’s
work, we will discuss the basic tenets of his
contributions to organizational sociology.
In the fourth part, we will then demonstrate
that Luhmann’s macro-perspective can offer
insights into societal differentiation, which
are also valuable for the concrete analysis of
organizations in society. With the help of two
examples we will exemplify the similarities
and differences between the macro-
sociological perspective in the new institu-
tionalism and Luhmann’s systems theory. In
the concluding section we will briefly
discuss the implications of our analysis.
 SYSTEMS THEORY, SOCIETAL CONTEXTS, AND ORGANIZATIONAL HETEROGENEITY
THE NEW INSTITUTIONALISM:
HOMOGENIZING FORCES IN SOCIETY
AND ORGANIZATIONAL FIELDS
The macro-perspective: global
diffusion processes and the
rationalization of society
The macro-sociological strand of the new
institutionalism has been elaborated mainly
by John Meyer over the last thirty years
(Krücken/Drori 2008). He assumes that
modern society is not a concrete and hard-
wired structure composed of actors. It is
rather a broader and imagined cultural
system, in which the main cultural patterns
of Western society – like universalism,
progress, and equality – are embedded. This
cultural system is inherently globalizing. The
driving forces of societal development are,
therefore, not actors and interests as typically
assumed. The causality is not ‘bottom up,’
but rather ‘top down.’ Society as the embod-
iment of broader cultural norms constitutes
its actors. With its strong phenomenological
and ‘culturalist’ emphasis, the macro-per-
spective in neo-institutional research is a
strong antidote against all kinds of realist,
individualistic and actor-centered social the-
ories currently prevailing in American soci-
ology (Jepperson 2002; Krücken 2002).
According to Meyer, the cultural system
of society constitutes three types of modern
actors: nation-states, organizations, and
individuals. Though organizations are of
paramount importance in Meyer’s macro-
sociological institutionalism, from the per-
spective of organizational research it is
striking that they mainly have the status of a
dependent variable in this theory context.
The cultural shaping of organizations is
mostly emphasized in Meyer et al. (1997).
Here, the authors criticize dominant interpre-
tations of globalization in which (a) global-
ization processes are interpreted as an
aggregate effect of state activities, and
(b) state activities are considered as an out-
come of individual and organizational action
541
within nation-states. Against this perspective,
Meyer et al. (1997) argue that organizations
are considered to be shaped by their wider
socio-cultural environment.
Though Boli and Thomas (1997) have put
more emphasis on the effects of organiza-
tions, they take a similar view. Their main
argument is that organizations of a specific
type – international ones of the third sector
(i.e., non-governmental and non-profit) –
serve as agents of world culture. The norms
and cognitive schemes of the latter, then, are
supposed to profoundly affect any modern
state and organizations of all types. The legit-
imacy and power of international organiza-
tions, so the argument goes, stems from their
status as institutions which are driven by uni-
versal ideals instead of utilitarian interests.3
As in the case of Meyer et al. (1997), the
authors identify a cause/effect-relationship
between states, organizations, and individu-
als on the one hand and a broader global cul-
ture and its organizational representatives on
the other. According to this perspective, the
former is the outcome of the latter. In addi-
tion, even the most influential organizations
are seen as carriers of broader cultural
norms, enacting and enforcing them, but not
as independent actors in society.
This macro-perspective on the relation
between society and organizations has led to
one of the most fascinating contemporary
research programs in sociology, which has
been highly influential for the development
of organizational institutionalism. Over the
last thirty years Meyer’s approach has proved
its originality and fruitfulness when address-
ing the global diffusion of cultural and struc-
tural features of Western society, which
cross-cut different regions and sectors of
world society. In this, the spread of formal
organizations, which are the central embodi-
ment of these features, figures most promi-
nently (for a most recent and systematic
account see Drori/Meyer/Hwang 2006).
The neo-institutional approach of Meyer and
his students has also proved its innovative
character by exploring new lines of theoreti-
cal and empirical research. Closer links to
542 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
other research traditions have been looked
for, like, for example, social movements
research (Khagram/Riker/Sikkink 2002;
Tsutsui 2004). Furthermore, the more recent
focus on science in the ongoing rationaliza-
tion of society (Drori/Meyer/Ramirez/
Schofer 2003) and theoretical reflections on
the constitution of individual actorhood in
modern society (Meyer/Jepperson 2000;
Frank/Meyer 2002) have opened up whole
new lines of investigation and made similari-
ties to other ways of theorizing visible,
which have hardly been explored yet.4
Nevertheless, and this point is central for the
argument we will develop here, the macro-
approach in neo-institutional research does
not systematically account for heterogeneity
and differences in society. Despite all theo-
retical developments and refinements the
approach has undergone over the last thirty
years, the underlying assumptions on
homogenizing forces in global society have
remained stable und unchanged. Even critics
who generally sympathize with that approach
point to the inherent limitations of its
overemphasis on homogeneity and conver-
gence (for a most comprehensive critique see
Schneiberg/Clemens 2006).
The meso-perspective: from inter-
organizational relations to
institutional entrepreneurship
DiMaggio/Powell (1983) have offered a
starting point, which is different from the
macro-perspective discussed above. Their
contribution does not refer to an all-
encompassing world culture or to other kinds
of broader societal contexts. Instead,
DiMaggio/Powell considered organizations
as being deeply shaped by those other organ-
izations which serve as ‘significant others’ in
the sense of Berger/Luckmann (1967).
Conceptually, organizational and inter-
organizational parameters gained status as
independent variables, and in this respect the
perspective has been meso-sociological. The
basic units were organizational fields (not a
single organization); and any organization
was considered to be embedded in a distinct
setting of organizations (Greenwood/
Hinnings 1996: 1026–7). DiMaggio and
Powell’s well-known ‘three pillars of
isomorphism’ (Scott 2001) thus can be used
to classify the shaping of organizations by
other organizations: Coercion results from
regulatory agencies (predominantly state
organizations); normative isomorphism is
based upon professional associations,
consulting firms and educational institutions;
and mimicry stems from the ongoing
observation of peers, competitors and
collaborators.
DiMaggio/Powell’s (1983) notion of orga-
nizational fields has expanded the scope of
organizational analysis profoundly. For the
argument to be developed here it is most cru-
cial to note that the concept of organizational
fields and its focus on isomorphism within
fields has, implicitly, offered an understand-
ing for persistent differences between fields.
To the extent to which organizations are
shaped by other significant organizations
(such as state organizations, regulatory agen-
cies, professional associations, consultants,
competitors and collaborators), they are
exposed to rather specific influences. It thus
may be concluded that organizations differ
according to their field membership which,
for example, results from their embedded-
ness in national regimes (Orrù/Woolsey/
Biggart/Hamilton 1991; Dobbin 1994).
Assumptions regarding the differentiation
of organized contexts also can be found in
other contributions from the founding phase
of the new institutionalism. Scott (1983)
distinguished between two sectors – techni-
cal and institutional – and argued that a focal
organization is embedded in either a techni-
cal or an institutional environment. This
assumption soon was replaced by the insight
that most organizations have to deal with
both technical and institutional requirements
(Hasse/Krücken 2005a: 33–4). Additionally,
it seemed that such a distinction was too rigid
to account for differences within these
two sectors. Scott and Meyer (1991) thus
 SYSTEMS THEORY, SOCIETAL CONTEXTS, AND ORGANIZATIONAL HETEROGENEITY
developed a more differentiated concept of
societal sectors. Sectors were conceptualized
as functional domains which are composed
of diverse organizations as well as correspon-
ding non-organizational features such as
meaning and belief systems or governance
structures and other ‘rules of the game.’ In a
similar vein, Scott (1991) has emphasized
characteristic features of organizational
fields. Not unlike DiMaggio/Powell (1983),
organizations appear to be deeply influenced
by ‘their’ field – and to a much lesser extent
by an all-encompassing world culture.
To summarize, the field approach is char-
acterized by the assumption that organiza-
tional fields mediate between a single
organization and broader societal contexts.
The implication of such a conceptualization
is that global impacts tend to be devaluated
because such impacts need to be enacted by
field-specific institutions. Such an under-
standing of organizational fields fits nicely to
observations of robust differences because
isomorphism within fields corresponds with
diversity among organizational fields. It thus
can be argued that clusters of interacting
organizations can be considered as
institutional barriers against homogenizing
trends on a global scale.
Based on the organizational fields-
approach some new institutionalists have
argued from the 1990s onwards that, to a cer-
tain extent, organizations can also actively
intervene in their contexts. This implies a
farewell to sharply distinguishing between
environmental causes and corresponding
effects on a focal organization. Instead, the
notion of organizational fields highlights
processes of mutual adaptation. As compared
with the top down-perspective of the macro-
sociological approach, organizations are thus
considered to be more actively involved in
the overall development of society.
According to this perspective, organizations
negotiate with other organizations and they
may also try to actively manipulate those
organizations and other institutional factors.
Analytically, the crucial shift is from
‘environment’ to ‘context’ (respectively
543
‘network’) because this shift implies that a
focal organization appears to be an integral
part of its institutional setting.5
Two basic questions emerge from this per-
spective: (1) What determines whether or not
organizations can be successful in actively
intervening into their context, and (2) what
determines how organizations may use their
potential for active intervention? In order to
deal with these questions, it should be noted
that neo-institutionalists ever since have
described the constitution of fields and the
socialization of single organizations as an
open and ongoing process. In this respect,
references were made to the social construc-
tivism of Berger and Luckmann (1967)
(DiMaggio/Powell 1983; Meyer 1992). The
legacy of this theory also has sensitized the
potential of organizations to active handling
of institutional constraints. Accordingly, the
processing of environmental constraints is
open for variation, and this deeply affects the
reproduction of the institutional context.
Fligstein (1996), for example, even has
described organizational fields as political
arenas – arguing that there are striking
imbalances of power at work (see also
Greenwood et al. 2002). While some organi-
zations may experience their field context as
being out of control, others may be in a
position that allows for an institutional engi-
neering of fields.
The idea of organizations being actively
involved in their context does not just imply
imbalances of power. It also raises questions
about how organizations may utilize their
potential and to what extent they handle
issues of power strategically. These questions
have led to a rediscovery of purposive agen-
cies, being conceptualized as something
which is not covered by institutional factors
(Beckert 1999). The concept of agency, how-
ever, is not taken from economic approaches
such as rational choice or principal/agency-
theory. Instead, new institutionalists have
incorporated insights from those theories of
practice which have been developed in late
20th-century European sociology (Bourdieu
1977, 1990; Giddens 1984; Joas 1996).
544 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Agency, then, includes the potential for
actively making choices and for reflexive
self-monitoring, but it is not assumed that
decisions and actions are determined by
fixed preferences (cf. Feldman/Pentland
2003: 95–6; Child 1997).
Institutions, from this perspective, may
constrain or enable to act in accordance with
given interests, and they may thus become
objects of strategic modifications. However,
it is not just organizations (and, of course,
not heroic individuals) which can serve as
‘institutional entrepreneurs’ (Thornton 1999;
Greenwood et al. 2002). Instead, professions,
standard setters (Hwang/Powell 2005) and
social movements (Rao/Monin/Durand
2003) can get involved in the engineering of
institutions. As a consequence, institutions
can be considered as the outcome of a broad
array of institutional entrepreneurship
(DiMaggio 1988) – either because actors are
supposed ‘to escape the determining power
of institutions … [or because of] … multiple
institutional referents that overlap and con-
flict’ (Dorado 2005: 385). This requires
that institutional forces have to be
handled actively (Barley/Tolbert 1997;
Friedland/Alford 1991). In any case, the
issue of institutional entrepreneurship has led
to a rediscovery of agency (Emirbayer/
Mische 1998). It has let researchers deal with
the entire range of cognitive, social and
material resources which are needed for suc-
cessful interventions in the institutional setup
(Rao 1998; Lounsbury 2001), and it has led
to the identification of contingency factors
which determine the opportunity structures
to do so (Seo/Creed 2002).6
Due to the theoretical significance of
entrepreneurship it comes as no surprise that
new institutionalists debate the issue contro-
versially. While some ‘stress at the outset
that an institutional perspective is more “con-
structivist” than “agentic” ’ (Hwang/Powell
2005: 180), others argue that ‘the discourse
of institutional entrepreneurship has helped
to usefully redirect neoinstitutional analyses
towards the study of actors and their
role in catalyzing institutional change’
(Lounsbury 2005: 30). From the latter point
of view, this discourse has attracted a great
bulk of attention, because it offers an expla-
nation for the dynamic character of institu-
tional contexts (Greenwood/Hinnings 1996).
There is also the potential to end quasi-
paradigmatic disputes with old institutional-
ists, with institutional economics and with
those social theories which put more empha-
sis on voluntary action and rational decision
making (Blom-Hansen 1997; Abbell 1995).
Finally, there are profound non-academic con-
siderations which support the emphasis on
active entrepreneurship, because, as compared
to macro-sociological top down-explanations
the focus on institutional entrepreneurs
offers better perspectives for decision makers
and consultants (Sahlin-Andersson/Engvall
2002). One may thus expect a high degree of
cultural legitimacy and support for develop-
ing such a perspective – and, ironically,
this is quite in line with basic insights of
the macro-sociological approach in neo-
institutionalism (see Hwang/Powell 2005: 182
for the same argument).
While such pragmatic reasons for bringing
actors back in have been discussed broadly, a
more critical reflection of the theoretical
impact of putting interests and entrepreneur-
ship at center stage has been neglected. In
order to compensate for this one-sidedness it
needs to be taken into consideration that the
outlined trend affects the aspiration to
explain what otherwise most often is taken
for granted – i.e., rational action and our
understanding thereof. In some cases, the
focus on institutional entrepreneurs has led to
a reversal of the traditional neo-institutional
perspective because actors’ preferences and
their choices are assumed to explain institu-
tional structures. The advantage of such a
perspective seems to be that one can more
easily focus on issues of variation and
differentiation – the Achilles heel in both the
macro-approach (‘global society’) and the
organizational meso-perspective (‘institu-
tional isomorphism’) in neo-institutional the-
orizing. The disadvantage, however, is that
the quest for less situational and for other
 SYSTEMS THEORY, SOCIETAL CONTEXTS, AND ORGANIZATIONAL HETEROGENEITY
than actor-based causes of persistent differ-
ences tends to be neglected. In particular, this
applies to causes which might be inscribed
in the social structure of modern society –
and which are experienced as external social
realities.
We assume that the quest for such causes
is less developed because the institutional
context programmatically has been equated
either with a uniform and homogenizing
world culture or with homogeneous institu-
tional configurations at the field level. Both
world culture-explanations at the macro-
level and field-concepts of isomorphism at
the meso-level did not allow for an explana-
tion of persistent differences, be they at the
level of society or within organizational
fields. In order to emphasize differences and
heterogeneity, for many neo-institutional
researchers there appeared to be no alterna-
tive to referring to the micro-level and to
bring purposive actors and their interests
and strategies back in. In what follows
we will present an alternative explanation
by referring to Luhmann’s systems theory.
It is based on a concept of social structure
which is more sensitive to differences –
and which considers such differences to
be deeply inscribed into the macro-structure
of modern society. Our brief account of
the basic tenets is structured around
issues of modern society’s internally
differentiated character, and the role
organizations play in that macro-sociological
approach.
LUHMANN’S SYSTEMS
THEORY: MODERN SOCIETY,
DIFFERENTIATION,
AND ORGANIZATIONS
Modern society as a differentiated
and multidimensional project
Luhmann’s theory of social systems is one of
the most comprehensive projects in social
theory of the 20th century. The approach is
545
unique in combining a grand historical per-
spective with an in-depth analysis of domi-
nant features of contemporary society.7 At its
core one can find a scheme that outlines the
evolution of human society from the begin-
ning onwards. In this respect, there are some
resemblances with Durkheim’s remarks on
simple forms of social life as the starting
point (Durkheim 1933). When it comes to
Luhmann’s reflection on more recent forms
of societal evolution, one may also identify
similarities with another founding father of
social theory: Max Weber. Not unlike Weber
(1958), Luhmann refers to a unique set of cir-
cumstances in the Western world which trig-
gered the take off of modernity.
In a broad socio-historical perspective,
Luhmann has stressed that sophisticated
forms of societal stratification emerged
before the advent of modernity, particularly
in ancient high cultures, as for example in
China, Egypt, Greece, and India (Luhmann
1982, 1997). Here, the differentiation is
strictly vertical, and societal order is struc-
tured in a clear-cut and hierarchical way.
Characteristic features of stratified societies
can be illustrated with respect to the tradi-
tional caste system in India. First, there are
strict rules which affect every facet of social
life. Second, mobility via economic achieve-
ment or via marriage is restricted. Third,
hierarchy is legitimized by religion. As a
consequence, status differences and positions
in the societal strata are experienced as des-
tiny, and no legitimate alternative form of
social order is taken into consideration.
Historically, the disappearance of vertical
stratification as the main principle of societal
differentiation was triggered by challenging
the status of religion as an authority that
determines social life in general. This process
began in Europe in the 16th century, when
politics began to claim autonomy from reli-
gion. At the end of this process, a political
order was to be found, which no longer was
subordinated to any other order. Since then,
politics can be described as a distinct field
which follows an inner logic that is independ-
ent of religious and other authorities.
546 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Likewise, the birth of the modern
sciences is marked by their emancipation
from religious beliefs and wider social norms.
In comparison with its ancestors, which were
embedded in guilds and monasteries, science
defined itself as an enterprise which is based
on the rigorous observation of facts. Since
then, social conditions, such as political regu-
lation or religious dogma, may constrain or
support scientific research, but they do no
longer directly affect the direction of scien-
tific progress. Luhmann has thus stressed that
the sciences have matured to an autonomous
sphere of modern society, just as politics.
A similar development could be observed
with regard to the economy. In this respect,
Luhmann’s contribution is in line with
Max Weber (1968), Karl Polanyi (1944),
Jürgen Habermas (1985/1989), Anthony
Giddens (1984), and many others. The
common ground of these sociologists is to
assume that economic relations, which
traditionally used to be embedded in wider
social bonds, are increasingly characterized
by the specific logic and rationality of the
economic field.
The economy may serve as the paradig-
matic case for the emergence and lock-in of
specific rationalities. It neither can be
derived from wider frames of non-economic
criteria nor can it be reduced to the motives
and preferences of individual actors. While
this basic idea was already at the heart of
Karl Marx’s analysis, Luhmann expands it to
a more general statement on the horizontal
differentiation of society. That type of socie-
tal differentiation, which has substituted ver-
tical stratification as the dominant mode of
differentiation, is called ‘functional differen-
tiation’ as societal systems are considered to
fulfil functions that cannot be substituted by
other systems.8 The economy as a societal or
functional system regulates the production
and distribution of scarce products and serv-
ices; science generates new knowledge; and
the political system is unique in producing
collectively binding decisions which affect
the entire society. From this point of view,
both politics and science, for example, are
distinct societal systems with characteristic
rationalities that cannot be subordinated to
the logic of other systems. Furthermore, the
historical appearance of other societal sys-
tems has been described. Among them are
the nuclear family and the ideal of romantic
love, which both are no longer primarily
based upon political or economic or any
other external reference. In a similar vein, the
emergence of an art system, of mass media
and of sports, has been described as a histor-
ical process. The fundamental characteristic
of any such system is that it is based on a
distinct logic, which implies that it develops
specific criteria for success. As a conse-
quence, what is politically feasible may not
be true according to scientific standards; real
love cannot be affected by economic consid-
erations, and arts are not necessarily in line
with religion.
Analytically, Luhmann has argued that
most societal systems, which came into
being with the turn towards the functional
differentiation of society, are based on a
binary scheme of information processing
(i.e., 0 or 1, plus or minus, yes or no). Binary
codes are all-encompassing constructions as
they allow everything that happens in society
to be processed by assigning one value or the
other. As everything can be processed
according to the binary coding of informa-
tion, societal systems actively scan their
environments for opportunities to apply their
codes. The technical advantage of such a
mode of information processing is its reduc-
tionism: Any information is either ‘0’ or ‘1.’
For example, the application of the binary
code ‘true’ or ‘false’ is assumed to be at the
core of science. Science can thus be defined
as that specific form of information process-
ing which strictly refers to whether or not
something is considered as true or false.
Binary coding not only allows for the expan-
sion of the system. It also safeguards against
the claims of other systems. Monetary pay-
ments, for example, are an important prereq-
uisite for science. A direct interference with
the code of scientific truth and falsity, how-
ever, is labelled as a scandalous distortion.
 SYSTEMS THEORY, SOCIETAL CONTEXTS, AND ORGANIZATIONAL HETEROGENEITY
The same logic is to be found in other sys-
tems as well. In the economy, monetary
transactions are related to each other. The
code is ‘payment’ versus ‘non-payment,’ and
the economic system can only be activated to
the extent to which this code can be applied.
In a similar vein, the political system is about
the power to make collectively binding deci-
sions, and the code is ‘power’ vs. ‘lack of
power.’ The legal system strictly distin-
guishes between ‘legal’ and ‘illegal,’ regard-
less of material effects and issues of social
norms; mass media are about attracting the
attention of the public according to what is
regarded as newsworthy or not; and sports
are based on the code ‘winning vs. losing.’
To summarize, most systems on the
macro-level of society represent a specific
and highly reductionist binary logic of
information processing, and concerns rele-
vant for other systems or overall societal
norms have to be transformed according to
that very logic.
Coded information processing provides
societal systems with an identity which
distinguishes them from each other. This
identity is not open for change. But these
systems are not only based on codes, but also
on programs that, by contrast, can and do
change. Programs provide societal systems
with information on how the code is to be
applied. According to Luhmann, the dynamic
character of societal systems is thus inscribed
into the variation of their programs. In order
to illustrate the dynamics of systems, one
may again refer to science. There is the state
of the art of a research field, there are
modifications with respect to theories and
accepted research methods, and there is vari-
ation of research agendas – all of which indi-
cate how the scientific code is to be applied.
Likewise, economic rationality can only be
applied to the extent to which scarcity,
demand and corresponding price signalling
can be identified; in politics there are
thematic issues, agendas, and political pro-
grams; the legal system is based on legal
norms as inscribed into constitutional law
and into court decisions; in mass media there
547
are schemes which serve as providers of
information about what to select and how to
present what has been selected; in sports
there are plenty of regulations which limit
and specify competition. Combining the
selectivity and robustness of binary informa-
tion processing with the openness and
flexibility of programs has provided societal
systems with a degree of complexity which
historically was never experienced before.
The consequence is unprecedented growth:
Today, there is more science than ever;
politics is more all-encompassing and regu-
lates many facets of society; legal issues can
be related to almost anything, economic
activities have exploded, etc.
Societal dynamics, however, are not
limited to the dynamics of its individual
systems. Any societal system is dependent on
the contributions of other systems, and
modern society is characterized by an
extraordinary high degree of mutual depend-
ency. The economy, for example, is in perma-
nent need of scientific knowledge in order to
be innovative; it is dependent on legal norms,
in particular with respect to property rights; it
needs mass media in order to attract attention
(via advertisement and product placement);
and it is in need for political decision making
and implementation, for example in order to
regulate competition or with respect to anti-
trust norms. Without such outputs of other
systems, the economy would be substantially
less efficient. Vice versa, the same holds true
for other systems, all of which are dependent
on economic and other outputs. Due to the
high degree of mutual dependency, a crisis in
any system may negatively affect other
systems. Societal evolution is thus described
as a risky enterprise. As Luhmann has shown
in particular in his work on risk and the envi-
ronment (Luhmann 1989, 1993) as well as in
his Observations on Modernity (Luhmann
1998), the polycentric and highly interrelated
character of modern society is both a strength
and a permanent source of vulnerability of
modern society.
Compared with the macro-sociological
perspective in neo-institutional theory, it is
548 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
obvious that Luhmann’s perspective empha-
sizes the multidimensional and internally dif-
ferentiated character of modern society. The
basic argument is that neither a hierarchical,
stratified order nor a clearly identifiable
center remains after the advent of modernity.
In the polycentric society as described by
Luhmann, no unifying system or common
coordinating principle exists. Neither reli-
gion nor politics, neither science nor the
economy determine modern society as a
whole. From this perspective, societal inte-
gration or homogenization on the basis of
universal norms and cultural principles
cannot be achieved. Instead, modern society
is shaped by very distinct societal logics and
their interrelatedness. Before we compare
basic tenets of both macro-approaches with
the help of two examples, we will focus on
Luhmann’s organizational theory.
Bringing organizations back in
In Luhmann’s grand theory of societal evolu-
tion organizations are of pivotal importance
as societal macro-structures and organiza-
tions co-evolve. Historically, organizations
emerged in ancient high cultures which were
characterized by the prevalence of a hierar-
chical and stratified societal order. However,
due to shortcomings in the social precondi-
tions of these societies – literacy, money
economy, and technologies of accounting
were still not given on a larger scale – the
diffusion of organizations was rather
restricted both geographically (close to the
leaders in the centers) and functionally
(public administration and larger military
and construction projects). While this con-
stellation remained rather stable for a long
time, the transition from stratified to func-
tionally differentiated societies witnessed the
spread of formal organizations. Luhmann has
described this initial phase of modernity as a
co-evolutionary process of functional dif-
ferentiation and organization building.
According to this interpretation, functional
differentiation requires formal organizations,
and it stimulates the further spread of organ-
izations which, again, allow for further
differentiation. This process of mutual self-
enforcement begins with the institutionaliza-
tion of guilds and crafts, and it is later related
to religious organizations, scientific associa-
tions, business enterprises, political parties
and so forth. The19th century is crucial for
the spread of the organizational form, when
club membership of very diverse sorts gained
status as an integral part of a modern
life style.9
Today, most societal systems are repre-
sented by specific organizations, and, vice
versa, most organizations are related to a
societal system. For organizations, this
implies copying and reproducing those forms
of rationality which are represented by the
codes of the system in which they are embed-
ded. The business firm, for example, is char-
acterized by subordinating any of its diverse
activities under monetary aspects, i.e., issues
of payments. Likewise, political parties and
their candidates strive for positions of
political power; scientific institutions and
universities aim at the discovery of truths,
sports clubs aim at being champions, pub-
lishing houses and TV stations try to gain the
attention of a mass audience, and so forth.
Exceptionally, organizations may alter their
primary orientation. For example, a research
institute may transform itself into an
economic organization. Additionally, a few
organizations may not be strictly related to
exactly one systemic logic (for example,
private hospitals), and there are still organi-
zations which cannot be related to any
societal system at all (for example, leisure
clubs). Nevertheless, most organizations in
society strictly accept one societal system
and its binary code as their main frame of
reference.
Organization research has found profound
evidence for the fact that organizations tend
to grow. It has also been shown that growth
and increasing complexity are parameters
which stimulate organizational differentia-
tion. According to Luhmann’s systems
theory, these processes strikingly reflect the
 SYSTEMS THEORY, SOCIETAL CONTEXTS, AND ORGANIZATIONAL HETEROGENEITY
functional differentiation of society. Many
organizations, for example, have established
research departments, some of them have set
up offices that deal with legal issues, large
organizations often engage in political lobby-
ing, economic criteria have to be considered
by organizations of all kinds, and deviance
from legal norms can seriously threaten any
organization. Organizations thus differentiate
themselves into departments or offices that
concentrate on economic issues, legal norms,
research, and so on. A major task for man-
agement then is to adjust such diverse ration-
alities to the identity of an organization,
which, as we pointed out before, is defined
through the specific rationality of the societal
system in which the organization is embed-
ded. To some extent, systems theory would
thus support the basic idea of the new institu-
tionalism that organizations are well advised
to copy the prevailing norms of their wider
societal context. In contrast to the new insti-
tutionalism, however, systems theory would
stress that these norms are copied only to the
extent that they support the realization of
ends which constitute the specific identity of
an organization as a business firm, as a
research institute, or as a political party, for
example.
From the perspective of Luhmann’s
macro-sociological approach, organizations
are not just crucial for the reproduction of the
differentiation of society into distinct societal
systems. They may also compensate for the
sharp differences in the logic of societal
systems because organizations of any type
are able to interact with each other
(Hasse/Krücken 2005b: 189–190). While
economic and scientific rationalities, for
example, cannot be synthesized at the
macro-level of society, which is character-
ized by very different societal systems,
economic and scientific organizations quite
frequently set up inter-organizational rela-
tions. Depending on their absorptive capa-
city, economic organizations can deal with
research issues, they can collaborate with
academic partners, and they may translate
and re-translate economic considerations
549
into research issues. Because something sim-
ilar may be said with respect to all other
types of organizations and with respect to
references to any societal system, heteroge-
neous inter-organizational relations have the
potential of mediating between different
social spheres and rationalities.
ACCOUNTING FOR
HETEROGENEITY: TWO EXAMPLES
In the following section we will briefly dis-
cuss the implications of Luhmann’s systems
theory for the analysis of two general topics,
which also figure prominently in neo-
institutional research: the expansion and
transformation of the modern welfare state
and recent trends towards academic entrepre-
neurship. Both examples show the fruitful-
ness of a theoretical perspective, which
assumes that the sources of societal and
organizational heterogeneity are to be found
at the macro-level of society. Against
the backdrop of the macro-approach in
neo-institutional theory, we will argue that
the trajectories of the welfare state do not
necessarily follow the enactment of broader
societal norms, but rather the distinct inner
logic and dynamics of the political system of
society and its organizations. In our second
example we will focus on an issue which
involves different societal systems, hence
triggering inter-organizational collaboration.
Instead of assuming homogenizing forces
which lead to the evaporation of institutional
boundaries, from the perspective of sociolog-
ical systems theory distinct logics of
information processing and related identity
concepts prevail.
The expansion and
transformation of the
modern welfare state
The modern welfare state seems to be a good
example for pointing out similarities and
550 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
differences between the macro-approach in
neo-institutional theory and sociological sys-
tems theory. Both converge on highlighting
the relevance of the welfare state for the
understanding of modern society. But while
for Meyer the development is driven by the
diffusion of general societal norms,
Luhmann emphasizes the specific rationality
of the political system as its driving-force.
From the macro-perspective both
approaches take, welfare state dynamics
cannot be grasped by a comparative perspec-
tive, which emphasizes national differences
and different types of modern welfare states.
From the comparative perspective, which has
been most convincingly elaborated by
Esping-Anderson (1990), specific institu-
tional configurations and power relations on
the one hand and varying functional require-
ments on the other hand are of central
importance here. As a consequence, many
parameters have to be taken into account as
potential determinants of welfare state
dynamics like the degree of industrialization,
family structures and demographic trends,
economic growth and prosperity, as well as
unionization and the strength of social
democrats.
From both a neo-institutionalist and a sys-
tems theory perspective, it is striking that
comparative welfare state researchers mainly
refer to national differences and functional
requirements. In contrast, both macro-
approaches focus on causes which can
neither be limited to individual nation-states
nor to functional requirements of societal
reproduction.
Following the neo-institutional approach
by John W. Meyer and others one rather
stresses the embeddedness of modern nation-
states in a global society (McNeely 1995;
Meyer et al. 1997). The emphasis is clearly
on the significance of a global culture and its
representation by international organizations,
and the impact of other welfare states as
models or at least as significant others is cen-
tral (Hasse 2003). From this point of view,
social policy has become an integral part of
the agenda of modern nation-states
(Strang/Chang 1993; Meyer 2007). They
have to adhere to broader societal norms of
justice and progress and enact related scripts
of social policy in order to be regarded as a
legitimate actor in society. Global standards
of social policy were codified by the UN
Declaration of Human Rights in 1948. Since
then, international authorities such as the
UNESCO, the International Labor
Organization (ILO) and others address wel-
fare issues to any modern nation-state
(Marshall 1981). Additionally, welfare state
issues are tackled by scientific experts and
social movements, both of which are organ-
ized in international associations and net-
works. It thus may be concluded that these
institutions develop a standardized frame of
reference, and any state risks its social legiti-
macy if it tends to ignore these contextual
parameters. The driving-forces of the expan-
sion of the welfare state are to be found at
the level of societal macro-structures,
i.e., broader societal norms which mainly
diffuse through international organizations.
Different degrees of exposure to the world
culture and its internationally organized
agents, as well as differences of power
between those institutions which are not in
accordance with global cultural scripts, may
account for differences among nation-states.
A similar perspective may be applied
when it comes to the transformation of the
welfare state which has been taking place
since the 1980s.10 Historical data give
evidence of a rather uniform expansion of
welfare state-expenditures until the end of
the 1970s (Flora 1986). Since then, however,
the development seems to be more contin-
gent. On the one hand, there are factors
which forcefully support the extrapolation of
this trend. On the other hand, serious concern
about the sustainability of such a dynamic
gained wide attention. As a consequence,
substantial changes have been observed – in
some cases materializing as sudden quasi-
paradigmatic shifts (Sweden at the end of the
1980s), in others lasting decades (Germany
from the 1970s until the present time).
Sometimes these changes were implemented
 SYSTEMS THEORY, SOCIETAL CONTEXTS, AND ORGANIZATIONAL HETEROGENEITY
as consensual projects (Finland in the
1990s); sometimes they were highly contro-
versial (the United Kingdom at the beginning
of the 1980s). From a neo-institutional point
of view, however, it does not suffice to
observe these transformations at the nation-
state level. Instead, the historical develop-
ment of the welfare-state, as well as more
recent transformations, have to be seen as a
globally orchestrated process, in which trans-
national organizations, world-wide diffusing
role models, experts and consultants are of
pivotal importance (Hasse 2003). The
OECD, for example, issued a dramatic report
in 1981 on the limits of welfare-state policies
(OECD 1981). Based on critical assessments
like this, substantial re-definitions took
place: Administration as Service (OECD
1987) was established as a new ‘Leitbild’;
issues of service delivery were tackled; pri-
vate alternatives to public bureaucracies were
favored; and reforms were driven by new
best practices such as ‘new public manage-
ment’ or ‘non profits for hire.’ This paradig-
matic change was accompanied by a
replacement of models (from Germany to
New Zealand), international organizations
(from ILO to IMF), and experts acting on
global scale (from Keynesian social engi-
neers to more practically inclined political
consultants).
While neo-institutionalism conceptualizes
welfare-state developments as trans-national
processes, in which global models and
scripts diffuse through a variety of channels,
systems theory emphasizes the effects of the
functional differentiation of society. As a
consequence, its political system appears to
be a distinct field which is based on a specific
logic or rationality, i.e., the application of the
binary code ‘power/not in power.’ In this, the
political system sharply differs from those of
other societal systems. In addition, the inter-
nal differentiation of the political system has
to be taken into account. Internally, the
system is composed of (a) political decision
makers (governments and office holders),
(b) administration and service deliverers, and
(c) the public (as both voters and clients).
551
Any of these institutions of the political
system contributes to the expansion of the
welfare-state. Other societal systems are only
relevant to the political system as an external
resource for its continuous reproduction. It is
thus not surprising that systems theory puts
a strong emphasis on the societal risks of
systems dynamics.
Following Luhmann’s Political Theory in
the Welfare State (Luhmann 1990), the
expansion of the welfare-state appears to be
an inevitable consequence of the evolution of
the political system. The welfare-state pre-
dominantly aims at the inclusion of persons
and groups. On the basis of political power
law and money are used as means of effectu-
ating the welfare-state. Structurally, its
expansion is pushed by the interplay of the
core institutions of the political system and
by referring to other societal systems: First,
dense competition for scarce offices is
assumed to result in political programs, in
which the societal environment is actively
scanned for themes and organized interests,
which might offer opportunities to apply the
principle of welfare-state politics. Mass
media is considered here as an important
mediator between organized interests on the
one hand and political parties and politicians
on the other hand. Second, administrative
agencies and their experts actively support
the identification of needs due to their pro-
fessional knowledge and due to micro-
political interests. Third, legal claims affect
the relation between the public administra-
tion and the public. This fosters the trend
towards an expansion of welfare politics, too.
As a consequence of this unprecedented
growth, severe problems occur in other parts
of society. In particular, Luhmann has
highlighted negative economic side-effects
(due to the extensive use of money, but also
due to attempts at actively regulating the
economy), the risk of overloading the law
system (due to the extensive use of law
resulting in shortcomings of application and
implementation), and the expansion of state
bureaucracies and professionals (as service
deliverers and as experts).
552 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
It should be noted that the starting point of
Luhmann’s analysis of the welfare-state is
quite similar to the neo-institutional perspec-
tive. Instead of highlighting national varia-
tions, both approaches emphasize structural
features of modern society, which affect very
different nation-states. However, two very
basic differences may be identified.
First, Luhmann refers to very general
characteristics of the political system, its
internal logic and core institutions as driving
forces of welfare-state developments, which
are to be found in very different nation-
states. Neo-institutionalism, instead, empha-
sizes trans-national, ‘external’ causes as
triggering these developments. Though
national differences are not of prime theoret-
ical concern for both approaches, they could
be explained through either specific national
configurations of political institutions and
their relevant societal environment (systems
theory) or linkages of nation-states to trans-
national discourses and organizations (neo-
institutionalism).
Second, the trend towards the transforma-
tion of the welfare-state, which has occurred
in very different countries and which has
been briefly discussed above, has to be con-
ceptualized very differently. While neo-
institutionalists focus on the role agents of
diffusion such as trans-national organiza-
tions, experts and consultants play, from the
point of view of systems theory one has to
stress that the discourses and concepts of
these agents do not diffuse easily. Instead,
they have to be translated into the political
system, and this happens according to the
logic and rationality of that very system, and
not according to broader societal norms and
scripts. Therefore, the focus is rather on
internal factors triggering change. Following
the distinction between codes and programs,
one should assume that aspects related to the
former are a source of structural stability.
Societal differentiation, competitive features
of the political system, and the interplay of
its core institutions are not considered as
objects of change. However, there is a perma-
nent variation of programs as they provide
the political system with information about
how to apply its basic principles. Programs
may vary profoundly across time and space,
and organizations, both within the political
system and in its relevant environment (like
media organizations, business firms, and
courts) do not simply enact broader societal
scripts. Instead, they play a very active
and contingent role in the variation of pro-
grams, for example those concerning the
welfare state.
Academic entrepreneurship
Academic entrepreneurship is embedded in a
more general reappraisal of the role entrepre-
neurial activities should play in society.
Entrepreneurship has increasingly been seen
as being beneficial with respect to broader
socio-economic impacts; in particular, start-
up companies which contribute to the trans-
fer of new knowledge are highly appreciated
(Thornton 1999). Universities figure most
prominently in this broader discourse on
entrepreneurship. All over the world, their
new economic responsibilities have become
visible. Economic parameters such as
start-up founding rates or the commodifica-
tion of new knowledge via patenting and
licensing have become new evaluation
criteria, and universities have begun to
actively get involved in these activities
(OECD 2003). Though direct links between
academic researchers and industry have a
long history in many fields, carried out in
addition to the main tasks of the individual
researcher, it has now become an
institutional mission of the university as
an organization. Based on the assumption
that a direct contribution to economic
development has become a third academic
mission of universities, on a par with the
traditional missions of teaching and research,
academic entrepreneurship seems to be
at the core of a new, globally diffusing
model for universities (see, for example,
Etzkowitz/Healey/Webster 1998; Krücken/
Meier/Müller 2007).
 SYSTEMS THEORY, SOCIETAL CONTEXTS, AND ORGANIZATIONAL HETEROGENEITY
While the new institutionalism emphasizes
the match between academic entrepreneur-
ship on the one hand and wider social norms
and expectations on the other, systems theory
puts more emphasis on aspects of societal dif-
ferentiation and the distinct logics of societal
systems. The former perspective is well estab-
lished in the context of this handbook. Here
one should mention neo-institutional research
on entrepreneurship (Hwang/Powell 2005),
on inter-organizational networks among acade-
mia and industry (Powell/White/Koput/
Owen-Smith 2005), and on universities and
their embeddedness in wider social norms
and expectations (Meyer/Schofer 2007).
Therefore, we will only focus on how aca-
demic entrepreneurship might be conceived
from the point of view of systems theory.
From that point of view one would assume
that distinct systems – in particular econom-
ics, politics, and science – with distinct
logics are involved, which cannot be
transcended.
First, systems theory considers business
firms as a specific kind of organization,
which is to be characterized by the fact that
normative expectations are directed towards
economic efficiency. Here, efficiency is a
means to achieve legitimacy, and any busi-
ness firm which does not meet economic cri-
teria in the longer run had to be evaluated as
a problematic case. This does not deny that
the initial economic difficulties of an aca-
demic start-up can be accepted for some
time, or that start-ups may aim at new mar-
kets or at attracting new investors instead of
achieving short-term profits. However, sys-
tems theory assumes that start-up companies
get into serious problems if they are evalu-
ated as hybrid organizations which serve
rather general and diffuse societal needs and
expectations, instead of aiming at economic
success in the longer run. Start-ups from aca-
demia may thus be characterized by a spe-
cific economic program (i.e., the marketing
of new knowledge which is genuinely risky),
but they can be considered as being rather
conventionally related to the binary coding of
economic activities through money.
553
Likewise, systems theory emphasizes that
the political dynamics fostering academic
entrepreneurship have to be analyzed like
those of any other political field. These
dynamics are related to power issues and are
characterized by the pursuit of a specific
rationality, which differentiates the political
system from other parts of society. In addi-
tion, one would not expect that innovation
politics and policies are breaking away from
the traditional means of effectuating the
welfare-state, i.e., law and money. Actively
contributing to academic entrepreneurship
is thus a supplement of political programs,
which inform the political system and its
organizations about where, when and how to
apply the binary code of politics. Systems
theory would stress that politics and policies
fostering academic entrepreneurship are
exclusively determined by political consider-
ations. It assumes that negative side-effects
with respect to science and the economy only
affect political decision making to the extent
that they make a political difference. For
example, the political promotion of start-ups
may have adverse economic implications.
Financial subsidies by the state may nega-
tively affect the development of a venture
capital market, and state-funded start-ups
find it harder to attain an economic reputa-
tion, which is important in order to attract
funding from venture capitalists. In a similar
vein one may expect long-term negative
effects on science if short-term socio-
economic effects, which can be labelled as
the outcome of political decision making and
thus be converted into political power,
become the dominant goal of science politics
and policies.
Finally, the same perspective can be
applied to research organizations, which are
assumed to process information along the
binary code ‘true’ vs. ‘false.’ Issues of
academic entrepreneurship are framed with
regard to the code and programs of the
science system, while material effects of
start-ups and positive socio-economic
impacts are considered to be less important.
This implies two things: First, at the level of
554 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
the individual researcher one should assume
that the specific incentive structure of that
very system makes him or her more prone to
conducting activities which can be mapped
by conventional indicators of successful
scientific action such as peer-reviewed publi-
cations. Publications have no direct equiva-
lent in other parts of society. On the other
hand, broader societal norms and the criteria
of other systems – like the general and, in
particular, political emphasis on entrepre-
neurial activities – have to pass this bottle-
neck in order to become relevant among
scientists. Second, also at the organizational
level one has to take a rather skeptical view
of the repercussions of the current trend
towards academic entrepreneurship. Most
studies on technology transfer offices at
universities suggest only very moderate
effects on entrepreneurial activities, and fol-
lowing Meyer/Rowan (1977) transfer offices
could be seen as a prime example of the
loose coupling between formal and activity
structures of university organizations
(Krücken 2003). According to systems
analysis, however, referring to ‘loose cou-
pling’ does not suffice as it does not explain
why most university organizations do not
fully embrace academic entrepreneurship.
Following that type of analysis, one would
rather assume that the degree of coupling is
closely related to the identity of an organiza-
tion, which itself is a function of the specific
societal system in which it is embedded.
To summarize, from the point of view of
systems analysis academic entrepreneurship
has to be considered as creating an opportu-
nity for societal systems and their organiza-
tions. Within different systems, academic
entrepreneurship might lead to variations at
the level of their programs. The hypothesis,
however, is that variations at the level of
programs can hardly affect the identity of any
of the systems involved. For system theorists,
the mutual adjustment of societal systems
through dense inter-organizational collabora-
tion between scientific, political and
economic organizations cannot be equated
with the evaporation of systemic boundaries.
Though such collaborations are important as
they mediate between different systems and
make their specific rationalities visible, they
need to be conceptualized primarily as
opportunity structures that can be exploited
by any of its participants. While new
institutionalists might expect processes of
mutual adjustment and isomorphic tenden-
cies, which may alter organizations
profoundly, systems theorists would rather
assume that the impact of such collaborations
will lead to new avenues for exploring the
dominant rationalities of the organizations
involved.
CONCLUSION
Sociological systems theory in the way it has
been developed by Niklas Luhmann can play
a crucial role in coming to terms with the het-
erogeneity and variety at the macro-level of
society. In this, it is a relevant antidote to the
traditional neo-institutional emphasis on
homogenizing forces. Instead of recurring to
the role of purposive actors as in the concept
of institutional entrepreneurs, sociological
systems theory stresses the conceptual links
between organizational analysis and wider
societal fields and their developments, and so
refers to the very starting point of organiza-
tional institutionalism. With the help of two
examples we tried to exemplify the fruitful-
ness of that approach. One could see, first,
that the neo-institutional emphasis on
broader societal norms and their diffusion in
the development of the welfare-state has to
be complemented by a perspective, in which
the distinct logic of one societal system, i.e.,
politics, and the role of political organiza-
tions, is highlighted. With our second exam-
ple we enlarged the perspective by focusing
on how one issue, academic entrepreneur-
ship, is perceived and processed according to
the distinct logics of different societal sys-
tems and their organizations. This, again,
complements the traditional neo-institutional
emphasis on homogenizing forces in society.
 SYSTEMS THEORY, SOCIETAL CONTEXTS, AND ORGANIZATIONAL HETEROGENEITY
According to our analysis, though both
approaches can hardly be integrated at a
meta-theoretical level, they can be used as
guidelines for re-establishing a macro-per-
spective on the interconnectedness of socie-
tal and organizational developments. While
neo-institutional theory is particularly good
at analyzing diffusion processes, which tran-
scend sectoral boundaries of society and
shape all units of analysis, systems theory
instead focuses on differences between soci-
etal systems and their organizations, which
cannot be transcended. At the interface of
these very different paradigms a fascinating
agenda for future research on the societal
embeddedness of organizations might
evolve. As we tried to show, accounting for
heterogeneity does not necessarily lead to a
reappraisal of individual agency. By referring
to sociological systems theory, organiza-
tional institutionalism might do better as we
can combine the more recent emphasis on
heterogeneity with the traditional strength of
organizational institutionalism which lies in
its focus on the co-evolution of organizations
and their societal environments.
NOTES
1 But see Hasse/Krücken (2005a: 85–94) for a
closer look at Bourdieu and Giddens from a neo-insti-
tutional point of view.
2 It should be noted that Luhmann has also devel-
oped a specific micro-foundation of organizational
theory, which offers further perspectives for a com-
parison with the new institutionalism (see Hasse
2005).
3 See Meyer/Jepperson (2000) for further details
on status differences between individual and organi-
zational actors with respect to non-utilitarian ends.
4 Here we think in particular of the work of Michel
Foucault. Though from very different angles and
despite Foucault’s rejection of the idea of a coherent
narrative of society, with regard to the role of science
and, in particular, to the constitution of individual
actorhood, both approaches display some remark-
able similarities (Krücken 2002: 248–53). As Foucault
has become one of the intellectual points of refer-
ence for broader organizational theorizing, especially
in the European context, also the field of organiza-
tional research might benefit from exploring how
555
Foucauldian and neo-institutional thinking relate to
each other.
5 John Child made a similar point in order to argue
in favor of his strategic choice-analysis: ‘The concept
of an organizational environment as a social network
… raises doubts about how externalized it really is
from its constituent organizations’ (Child 1997: 57).
In order to emphasize this, Child rigorously identifies
‘inner structuration’ (related to organizational
parameters) and ‘outer structuration’ (related to the
organizational context) as objects of strategic choice
(Child 1997: 70–1).
6 To some extent, the contemporary emphasis on
agency and institutional entrepreneurship seems to
be a ‘forward to the past.’ There are striking resem-
blances to theoretical discussions many decades ago
when old institutionalists such as Philip Selznick
(1949) and Arthur Stinchcombe (1965) were
highlighting issues of power and conflict
(Greenwood/Hinnings 1996: 103–4). In doing so,
they joined a broad coalition of researchers which crit-
icized the prevailing Parsonian approach as being far
too static and sterile. Among these critics was S.N.
Eisenstadt (1964, 1965), who considered elites and
leadership roles as carriers of institutional entrepre-
neurship. Not unlike many contemporary researchers
of entrepreneurship, Eisenstadt also argued that ref-
erence to other institutions and the ability to mobilize
support were preconditions for institutional change.
7 We deliberately leave out the epistemological
underpinnings of Luhmann’s work, which are based
on more recent discussions in general systems theory,
neuroscience, and logics. For an attempt to link these
highly sophisticated arguments, which lead to a
theory of social systems’ self-reference (Luhmann
1995) and self-observation (Luhmann 1998), to orga-
nizational theory (see Seidl/Becker 2005).
8 There is a certain tension in Luhmann’s work
between the early emphasis on societal functions as
the driving-force of differentiation processes and the
later emphasis on processes of internal self-reproduc-
tion. While the early period is marked by the influ-
ence of Talcott Parsons, the later one is linked to the
‘autopoietic turn’ in general systems theory, i.e., the
assumption that the elements of a system are linked
to other elements of the same system, but not to
external references. As we will focus on the distinct
logics of individual societal systems, through which
they constitute themselves in difference to other soci-
etal systems, the functional aspects of Luhmann’s
work are only to be seen against that backdrop.
9 It should be noted that close linkages between
organization building on the one hand and the
development of specific forms of rationality have
been observed by other social scientists as well.
Michel Foucault, for example, has emphasized the
significance of the ‘birth of the clinic’ (Foucault 1973)
for the development of the modern medical system;
556 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Richard Whitley (1984) convincingly has shown that
the transformation of more or less sporadic ‘amateur
sciences’ into the modern science system was based
on the re-organization of universities which special-
ized with respect to academic disciplines and corre-
sponding scientific associations; the modern political
system has been considered to be based on the for-
mation of competitive political parties and the incor-
poration of various interest groups (Evans 1999); and
according to Max Weber (1968) modern capitalism
revolutionized the economy on the basis of the insti-
tutionalization of the business firm which is different
from a traditional economy based on households. For
a more general account on the importance of the
19th century for the spread of formal organizations
in society see also Türk (1995).
10 As both neo-institutionalism and systems
theory focus on the long-term development of the
welfare state, they rather emphasize its expansion.
The more recent experiences mentioned below, how-
ever, could be seen as strong indicators for the
‘retreat of the state’ (Strange 1996) and the expan-
sion of economic rationality in society. From the per-
spective of neo-institutionalism and systems theory
one could argue that these experiences could only be
fully understood against the backdrop of a more
macro-historical and macro-sociological account. In
addition, current discourses and practices could be
analyzed without altering the main conceptual tools
and premises of both approaches. From a neo-insti-
tutional point of view, Lee/Strang (2006) analyze
public-sector downsizing in 26 OECD countries as a
global diffusion process. In a similar vein, one could
argue from the point of view of Luhmann’s systems
theory that we can currently witness variation in
political programs, while the code of the political
system, in which the dominant rationality of the
system is to be found, remains unchanged.
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Charting Progress at the Nexus
of Institutional Theory and
Economics
INTRODUCTION
The aim of this volume is to chart the
progress being made refining institutional
theory (Powell & DiMaggio, 1991) and its
contributions to organizational studies. This
progress includes developments at the core
of institutional theory, as well as those at the
intersections with other organizational
perspectives and theories. The specific aim
of this chapter is to reflect on the progress
made – and still to be made – toward inte-
grating insights from institutional theory
with those from organizational economics.
There is no doubt that the very different ori-
gins and orientations of these two approaches
make their integration a challenging
endeavor. In the words of Granovetter
(1985), economists tend to offer under-
socialized accounts of organizational pheno-
mena, whereas institutional theorists tend
toward over-socialized explanations. More
specifically, economic theories emanate
from assumptions of organizational actors
as rational calculating entities. On the
23
Peter W. Roberts
other hand, the strong form of institutional
theory views these actors as more reflex-
ively conforming to the various institu-
tional influences and constraints that
emanate from the fields in which organiza-
tions are embedded.
This chapter is rooted in the premise that
there is some potential for a more seamless
integration of the two perspectives. In what
follows, I briefly summarize the main tenets
of organizational economics and institutional
theory, drawing primarily from the organiz-
ing framework offered by Roberts and
Greenwood (1997). This framework suggests
two broad ways that the institutional and eco-
nomic perspectives might be bridged: by
examining how purposeful and otherwise
rational organizational actors react to the
post-conscious (i.e., sociopolitical) and pre-
conscious (i.e., cognitive) institutional influ-
ences that they face when navigating
organizational fields. This allows us to point
to some productive integrative research
located along the first bridge. On the other
hand, we find less published work that
 CHARTING PROGRESS AT THE NEXUS OF INSTITUTIONAL THEORY AND ECONOMICS
integrates Scott’s (1995) cognitive pillar with
economic perspectives on organizations.
I then offer several reasons for the more scant
progress along this second bridge before
concluding with several thoughts about the
prognosis for further integrative research.
TWO COMPETING APPROACHES
Organizational economics and institutional
theory offer seemingly contradictory
accounts of organizational phenomena.
‘Economic approaches to the study of organ-
ization, transaction cost analysis included,
generally focus on efficiency’ (Williamson,
1981: 549) and aspire to ‘provide an answer
to the most fundamental question in organi-
zational research: why do organizations
exist?’ (Hesterley, Liebeskind, & Zenger,
1990: 404) The field originally examined the
comparative efficiency of hierarchies, fran-
chises, multidivisionals, conglomerates,
holding companies (Williamson, 1975),
clans (Ouchi, 1980), and market-hierarchy
hybrids (Williamson, 1991). More recently,
economic logic has been employed to
explain a broader array of organizational and
strategic phenomena, including joint ven-
tures (Yiu & Makino, 2002) and franchising
arrangements (Shane & Foo, 1999). In all
cases, the basic rationale for any given orga-
nizational action or outcome is rooted in its
efficiency compared to the set of available
alternatives, including markets.
Historically, institutional theorists have
been more interested in explaining unifor-
mity than heterogeneity (Dimaggio &
Powell, 1983). This naturally leads them to
focus on the organizational field or even
society at large as the primary unit of analy-
sis. Organizations operate in environments
where much is taken for granted. The taken-
for-granted elements, which are either
infused with excess value (Selznick, 1957)
or constructed in the process of social inter-
action (Berger & Luckmann, 1966), serve as
powerful schema or frames, shaping the
561
decision-making process by influencing
what is or is not perceived by decision
makers. These influences correspond to
Scott’s (1995) cognitive pillar, which focuses
on the frameworks of meaning by which
actors interpret and make sense of their
world. Unlike the bounded rationality
emphasized by transaction cost theorists, the
cognitive influences emphasized by institu-
tional theorists relate to ‘the internalized
symbolic representations of the world’
(Scott, 1995: 40). On the other hand, Scott’s
(1995) normative pillar highlights the sets of
expectations within particular organizational
contexts of what constitutes appropriate and
thus legitimate behavior. Tangible forces in
an organization’s environment directly or
indirectly tilt choices away from technical
considerations and toward the pursuit of
legitimacy. In this respect, Meyer and Rowan
(1977: 343), objecting to the common por-
trayal of organizational designs as the prod-
uct of the technical demands placed on an
organization, argue that ‘elements of formal
structure are manifestations of powerful
institutional rules which function as highly
rationalized myths that are binding on partic-
ular organizations.’
Admittedly, organizational economists
have alluded to the significance of institu-
tions. At a general level, institutional
economists contend that the orthodox micro-
economics paradigm is enhanced if the
choices made by ‘economic man’ are under-
stood as occurring within the context of insti-
tutions which act as constraints upon the
choices made. Williamson (1992: 41) is
explicit about the role of the institutional
environment, suggesting that ‘the institutions
of governance … are embedded in the insti-
tutional environment.’ However, the institu-
tional environment that he envisions consists
only of the ‘set of fundamental political,
social and legal ground rules that establishes
the basis for production, exchange and
distribution’ (Williamson, 1993: 11). The
institutional environment envisioned by
institutional theorists includes its more
sociological elements, such as patterns of
562 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
social relations (Burns & Wholey, 1993) and
embeddedness interpretations (Meyer &
Rowan, 1977). These perspectives – Scott’s
(1995) second and third pillars of institu-
tional thinking – have not figured promi-
nently in the work of organizational
economists. Yet, it is to these features that
writers such as Granovetter (1985), Robins
(1987) and Hesterley et al. (1990) point when
they assert the need to more fully consider
the institutional aspects of organizations.
This said, there have been movements in
the two theoretical camps toward recogniz-
ing potential contributions from one another.
David and Han (2004: 54) recently con-
cluded that transaction costs theory ‘can be
refined by specifying “scope conditions” …
given the mixed support transaction cost eco-
nomics is currently garnering, it is critical to
understand the conditions under which the
theory works well and under which it does
not.’ Along these lines, organizational econo-
mists have challenged themselves to account
for the many influences and constraints that
operate upon the calculating agents that they
are modeling. Williamson (1987: 176) noted
that if pushed, ‘few economists would insist
on an unrelieved efficiency theory of economic
organization.’ Rather, organizational econom-
ics should be based on what may be referred to
as weak-form, rather than strong-form selec-
tion. In a relative sense, it is the more
(but not the most) efficient organizations
that tend to fare well and therefore
survive. There is no reason to insist that sur-
vivors are always the most efficient in any
absolute sense. In his critique of transaction
cost theory, Robins (1987: 74, emphasis
added) similarly stressed that optimal
exchange efficiency need not always result:
‘the degree to which any individual organiza-
tion will be pushed to find and adopt
internal cost economies will reflect both the
level of competitive pressure to which it is
subjected and the available strategic alterna-
tives.’ Along similar lines, Winter (1991)
noted that competitive pressures operate on
whole organizations and that sub-optimal
and even dysfunctional intra-organizational
arrangements can persist over long time peri-
ods. Beliefs that strong-form efficiency is not
paramount, that organizational outcomes are
influenced by actors’ perceptions of available
alternatives, and that these outcomes might
be technically dysfunctional seem to open
the door for potential contributions from
institutional theory to economic perspectives
on organizations.
At the same time, institutional theory long
focused on ‘how non-choice behaviors can
occur and persist, through the exercise of
habit, convention, convenience, or social
obligation.’ (Oliver, 1991: 151) In its
strongest form, the institutional approach
rejects the premise that organizational phe-
nomena are the products of rational choice
based on technical considerations. Rather,
emphasis is placed either on the taken-
for-granted nature of the decisions made or
on the pressures to secure legitimacy that
operate on organizations, or both. Since the
mid-1990s, however, institutional theorists
have charged themselves with the task of
injecting an appropriate amount of agency
into their accounts of organizational behav-
ior. DiMaggio and Powell (1983) and Tolbert
and Zucker (1984) recognized early on that
institutional forces are not always primary,
noting the tendency for the early adoption of
novel organizational practices to be driven by
technical as opposed to legitimacy consider-
ations. Echoing Granovetter’s (1985)
concerns about over-socialized theory,
Powell (1991: 194) suggested that ‘much of
the imagery of institutional theory portrays
organizations too passively and depicts envi-
ronments as overly constraining.’
From these brief overviews, it seems clear
that some promise for more effective integra-
tion is found in the common belief that there
are (social) structural constraints on the
otherwise purposeful behavior of organiza-
tional actors (Ingram & Clay, 2000). If one
begins with organizational economics, the
task is to integrate the many institutional
constraints on rationality into the accepted
choice paradigms. If one begins with institu-
tional theory, the task is to find a way to
 CHARTING PROGRESS AT THE NEXUS OF INSTITUTIONAL THEORY AND ECONOMICS
inject some economic rationality into the
otherwise overly passive predictions that
emanate from institutional theory.
PROGRESS TOWARDS INTEGRATION
Fulfilling this promise, we have been seeing
a range of organizational research that may
be cast (explicitly or implicitly) as an inte-
gration of institutional and economic
approaches. The most straightforward way
for competing theoretical perspectives to
come together is in empirical investigations
that include sets of variables representing
each. One example of this is found in Baker,
Faulkner, and Fisher’s (1998) analysis of the
expected duration of ties between advertising
firms and the companies that hire them. The
authors develop a set of hypotheses grounded
in competitive, power-based and institutional
explanations of tie duration. After running
their analysis, they are able to conclude that
all three forces influence client–agency ties
and that their importance clearly varies.
From there, they are able to discuss how the
latter two theoretical perspectives help to
elaborate a basic economic view of markets
as straightforward competitive spaces.
Similar types of analyses are found at the
intersection of institutional and transaction
cost theories. Shane and Foo (1999) add a set
of institutional variables to models predicting
survival rates of new franchisors and con-
clude that survival is better explained by
adding the institutional variables. D’Aunno,
Succi, and Alexander (2000) argue and then
find that market (economic) and institutional
forces combine to influence radical changes
in rural hospitals. Yiu and Makino (2002)
conduct a similar analysis of the use of joint
ventures and find that both transaction cost
and institutional theory variables return
significant coefficients in their models.
These types of empirical efforts are indica-
tive of the type of integration suggested by
Gibbons (2005) when he notes that exposure
to different theoretical perspectives allows
563
researchers access to different dependent and
(in this case) independent variables.
However, the prospect of a more complete
and synthetic integration of the institutional
and economic perspectives requires that the
theories themselves interact in order to
deliver a more nuanced account of important
organizational phenomena. But, as we saw in
a recent exchange between Zuckerman
(2004b) and Zajac and Westphal (2004a), it
is quite a bit more challenging to achieve a
satisfactory synthesis when theories and
explanations are intended to be integrative
rather than simply additive. All of these
authors see the prospect for sociological
theory to improve upon prevailing economic
accounts of financial markets. Zuckerman’s
(2004a) analysis in the same volume argues
that incoherent stocks – as indicated by their
positions in the network of coverage by
investment analysts – face interpretation
problems which lead to greater volumes of
trading and greater pricing volatility in
response to new information relevant to those
stocks. Zajac and Westphal (2004b) invoke
institutional theory in general and decou-
pling in particular to explain the pattern of
stock market reactions to announced stock
repurchase plans, emphasizing those plans
that were never actually implemented.
Notwithstanding the common interest in
some theoretical integration, the above-
mentioned commentaries invoke questions
about the need for a faithful representation of
each base theory (Zuckerman, 2004b) and
about how far certain basic economic
assumptions can and should be stretched in
order to achieve theoretical synthesis (Zajac
& Westphal, 2004a). And note that this
particular debate was waged between an
economic sociologist and two organizational
theorists. It would seem that it is easier to
conclude that institutional variables add to
the explanatory power of economic models
than it is to determine how institutional
theory might alter the way economists should
build their models.
Before discussing the many challenges
that impede a more satisfying theoretical
564 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
integration of these two perspectives on
organizations, it is important to emphasize
that some progress is being made. In propos-
ing a nexus between institutional theory and
organizational economics, Roberts and
Greenwood (1997) proposed that these vari-
ous institutionalisms be grouped into two
broad categories of influence: pre-conscious
and post-conscious. In this respect,
they follow Jepperson (1991: 147), who
stressed that ‘one may take for granted some
pattern because one does not perceive it,
or think about it [i.e., pre-conscious];
alternatively, one may subject the pattern to
substantial scrutiny, but still take it for
granted … as an external objective constraint
[i.e., post-conscious].’ Similarly, Aldrich
and Fiol (1994) suggested that the
institutional environment delivers two
distinct types of legitimacy: cognitive (i.e.,
pre-conscious) and sociopolitical legitimacy
(i.e., post-conscious).
A review of the organizational research
published in the last fifteen years reveals an
important stream that integrates insights
from institutional theory into strategic
approaches that, while not explicitly eco-
nomic, draw heavily from economics.
Consider Oliver’s (1997) article that inte-
grates institutional theory and the resource-
based view of the firm. This begins to think
about organizational heterogeneity as being
driven in part by the institutional forces that
(differentially) condition resource accumula-
tion processes. Deephouse (1999) similarly
introduces institutional factors into strategy
research. Because legitimacy is something
that should augment organizational perform-
ance, managers must weigh the costs and
benefits of being different against the gains
associated with conforming to institutional-
ized industry practices. Also in this line of
research is Krishnan, Joshi, and Krishnan’s
(2004) attempt to integrate institutional theory
and the resource-based view in an explana-
tion of the pattern of merger activity. All of
these articles elaborate the above-mentioned
post-conscious institutional influences by
showing how managers might augment
organizational performance by actively
managing aspects of their institutional envi-
ronments. Invoking Suchman (1995), they
are beginning to articulate how managers
might gain, maintain and repair different
types of legitimacy, which is itself a critical
organizational resource, especially in indus-
try settings wherein the dominant selection
forces are not efficiency based.
These theoretical integrations actually fit
nicely with an economic conception of
rational, albeit constrained organizational
actors. When there are forces in the external
environment that make it costly or impossi-
ble to act efficiently, or if there are forces
that favor objectives other than efficiency,
then it makes sense that the constrained eco-
nomic actors will make different choices.
Failure to recognize these forces would pro-
duce accounts of organizational behavior that
are under-specified. The problem is that
institutional theory also claims that institu-
tional forces take hold in predicting behav-
iors when actors are not expected to behave
purposefully or rationally. This said, we have
not seen many similar explanations of
managerial choice in the context of pre-
conscious institutional influences and
constraints.
PROSPECTS FOR FURTHER
INTEGRATION
The integration of organizational economics
and institutional theory should be viewed
among the broader set of efforts aimed at
integrating economics and sociology. In the
last fifteen years, sociologists have published
a few articles in leading economics journals
exploring the nexus of sociology and
economics. While offering some hope for the
future, Baron and Hannan (1994: 1140)
observed that ‘economists looking for sociol-
ogists for insights regarding norms and insti-
tutions report considerable disappointment’
and that these same economists have a diffi-
cult time setting aside their long-standing
 CHARTING PROGRESS AT THE NEXUS OF INSTITUTIONAL THEORY AND ECONOMICS
preference for efficiency-driven accounts of
these norms and institutions. Podolny (2003)
urged economists to make greater use of
visual imagery in their theorizing and illus-
trates his point by showing how network
sociologists have developed a more refined
and realistic account of social capital than
that currently being developed by econo-
mists. Granovetter (2005) elaborated this
point by describing how social networks
affect economic outcomes by influencing the
flow and quality of information, the efficacy
of rewards and punishments, and the
development of trust among exchange part-
ners. Both of these latter authors illustrate
their main points with reference to several
specific empirical projects that are situated at
the nexus of economics and network
sociology.
A review of these (admittedly few) articles
reveals several things. That they were pub-
lished at all indicates that there is at least a
latent interest within the economics profes-
sion in how different sociological approaches
might inform or elaborate economic analysis
(Baron & Hannan, 1994). However, that they
are all commentary articles suggests that
many of the potential impacts have not yet
been explored or realized. Moreover, note
that none of the sociologists invited to
address the economics profession about pos-
sible contributions from sociology are insti-
tutional theorists, but rather ecological,
network, or economic sociologists. This
latter observation may be due to several rea-
sons. First, as suggested earlier, economic
approaches to organizations are subsumed
under the broader heading of institutional
economics (Roberts & Greenwood, 1997).
As a result, the economics profession already
has a subfield that studies institutional influ-
ences on economic behavior. Although the
potential contributions from the sociological
variant of institutional theory are broader
than those currently found within institu-
tional economics, the placement of the latter
camp within economics might hinder the
field’s ability to perceive them. As (possible)
evidence of this, note that in a recent
565
comprehensive review of institutional eco-
nomics, Hodgson (1998) made reference to
just a handful of sociologists (including
Wayne Baker, James Coleman, Anthony
Giddens, Mark Granovetter and Harrison
White), all noteworthy contributors to socio-
logical theory, but none considered central to
the development of the sociological variant
of institutional theory.
A second reason might relate to the differ-
ent approaches to (especially empirical)
research between network, ecological and
economic sociologists and their institutional
counterparts. The sociological variants repre-
sented in the above articles tend to pursue
deductive theorizing to set up quantitative
analyses of the predictions that result. On the
other hand, institutional theorists, especially
those working on Scott’s (1995) cognitive
pillar, tend to pursue more inductive qualita-
tive research agendas. For example, consider
Zilber’s (2006) analyzes the discourse sur-
rounding the high technology sector in Israel
to explore ‘institutionalization as transla-
tion.’ In a similar vein, Suddaby and
Greenwood (2005) analyze the ‘discursive
struggle’ that ensued between proponents
and opponents of a new organizational form
that sprang from an attempt to merge an
accounting firm with a law firm. That these
qualitative approaches are not widely
accepted in the economics profession
(Hirsch, Michaels, & Friedman, 1987)
might speak to the under-representation
of certain strands of institutional theory in
these calls for greater appreciation of the
sociological contributions to economic
research. In this respect, note the conclusion
that Hodgson (1998) reached about the
demise of the ‘old institutionalism’ within
economics:
old institutionalism was partially disabled by a
combined result of the profound shifts in social
science in the 1910–1940 period and of the rise of
a mathematical style of neoclassical economics …
With their use of formal techniques, mathematical
economists caught the imagination of both theo-
rists and policy makers. In comparison, institution-
alism was regarded as technically less rigorous, and
thereby inferior. (1998: 167)
566 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
This suggests that the lack of (potential)
appreciation for the more cognitive institu-
tional approaches is rooted in some antago-
nism toward the type of research that these
latter scholars tend to pursue.
The third possible reason for the relative
neglect of institutional theory is more subtle.
If one stops to consider the purported
contributions of ecological, network, and eco-
nomic sociology to mainstream economic
approaches, one might conclude that institu-
tional sociology can have an important indi-
rect influence. Within organizational ecology,
legitimacy has emerged as an important com-
plement to competitive effects as a driver of
organizational vital rates and therefore indus-
trial evolution. This is clearly evident in the
now standard density-dependence predictions
(Carroll & Hannan, 1999). Whereas organiza-
tional sociologists have staged heated debates
about exactly how legitimacy should be
framed and measured (Baum & Powell, 1995;
Hannan & Carroll, 1995), one sees a potential
contribution of institutional theory to
economics channeled through the latter’s
potential synthesis with organizational ecol-
ogy (Geroski, 2001). Similar conclusions
may be made about the contributions of insti-
tutional theory through network and
economic sociology. The former group tends
to channel important institutional concepts
such as norms (Portes, 1998), while the over-
lap between economic sociology and institu-
tional theory is well documented (Fligstein,
2001). That institutional theory informs these
other sociological perspectives, which are in
turn being called upon to refine economic
approaches, indicates potential for an indirect
integration of institutional theory and
economic approaches to organizations.
All comments about potential notwithstand-
ing, it would be safe to say that economists
have not yet embraced the main tenets of
institutional theory as they develop their
accounts of market and organizational
phenomena. Be it due to a categorical over-
sight (i.e., ‘we already study institutions’) or
a lack of appreciation of the typical institu-
tional mode of analysis (i.e., ‘we do not
appreciate qualitative analysis’), this leaves
the prospect of important organizational
issues being under-theorized. Even worse, it
may cause scholars working from the
different perspectives to offer fundamentally
different explanations for what may be
exactly the same phenomena. Consider the
case when a researcher observes that the
probability that an organizational actor ‘does x’
increases with the number of prior actors
who have ‘done x’ in the past. To an institu-
tional theorist, this seems like evidence of
cognitive legitimacy. The local prevalence
of a given practice causes it to become
institutionalized and therefore taken for
granted.
Now consider the more recent explanation
of ‘informational cascades’ (Bikhchandani,
Hirshleifer, & Welsh, 1992). According to
these economists, cascades are observed
when, based on the observations of choices
made by others, an actor makes the same
choice regardless of her own private informa-
tion. On the surface, it seems like economists
are embracing the density-driven legitimacy
processes channeled through organizational
ecologists from institutional theory.
However, in these models of informational
cascades, there are no such legitimation
processes. Rather, this actor is actually
behaving rationally and what the economists
are observing is called a ‘rational herd’
(Banerjee, 1992): Even when all actors col-
lectively have overwhelming information in
favor of the ‘correct’ course of action, each
actor may still take the ‘wrong’ action. We
see within economics the recognition of
something that is clearly a density-dependent
process. We also see the potential for the two
groups of scholars to collaborate on a more
meaningful and nuanced account of this
observation. In the end, however, economists
tweak the basic rational actor model and
refuse to recognize the cognitive institutional
influences that might be operating.
The resulting stalemate reflects back to the
basic tension inherent in any integration of
economics and institutional theory. The latter
group seeks to elaborate the externalized
 CHARTING PROGRESS AT THE NEXUS OF INSTITUTIONAL THEORY AND ECONOMICS
social constraints that impinge on the agency
of actors (i.e., cognitive legitimacy), while
the former seeks to develop more nuanced
accounts of the inherent rationality of those
actors (i.e., rational herds).1 The problem is
that both accounts cannot be simultaneously
correct. If actors are reflexively adopting the
more prevalent ‘x’ because it has become
taken for granted then they are not forming
and updating assessments based on the
balance of private and public information.
One way to make progress on this front is by
conducting detailed examinations of the
decision-making processes that are actually
adopted by the focal actors. The problem
here is that we are taken back to the above-
mentioned ambivalence among economists
toward the outcomes of such qualitative or
interpretive empirical exercises.2 There is
simply no shared appreciation of the more
qualitative research approaches that would
help determine whether and how legitimation
might be shaping the decision-making inside
the information cascades.
Scholars working toward an improved
understanding of the organizational phenom-
ena should not strive to lay down overlapping
and inconsistent accounts of the same things.
Rather, they should strive to develop more
synthetic and more reasonable accounts of
these phenomena. One way to make progress
is to follow the advice of Zuckerman (2004a,
2004b) and take seriously the idea that actors
seek to, and in many cases do, behave ration-
ally and then call on sociological explana-
tions to explain behavior that sits beyond the
bounds of that rationality. In this respect,
note what happens when organizational
researchers adopt the more synthetic
approach. Rao, Greve, and Davis (2001) con-
ducted an analysis of information cascades in
the context of stock analysts’ decisions to
cover certain firms. While they find evidence
of mimetic behavior in the context of cover-
age decisions, they are careful to understand
the extent to which their results imply that
‘actors are cognitive dopes rather than
cognitive misers’ (2001: 502). In the end, by
examining the full range of adoption,
567
evaluation and abandonment decisions on the
part of the analysts, they are able to offer a
more nuanced account of when otherwise
rational actors are made passive in the face of
institutional pressures, and when their
accumulating knowledge and information
allows them to adjust their behaviors more
purposefully.3
WHERE IS THIS HEADING?
If one casts the integration issue as a simple
debate between whether organizational
actors are rational or are passively shaped by
prevailing institutional forces, then there is
little hope for progress toward integration.
The good news here is that – as suggested in
several places in this chapter – several schol-
ars are moving past the simplest of polemics
by modeling organizational actors as being
purposeful within institutional constraints.
Oliver (1991), Deephouse (1999) and
Suchman (1995) are developing accounts
of how managers seek to accrue legitimacy
by actively managing post-conscious
institutional constraints, while Rao et al.
(2001), Zuckerman (2004a) and Zajac and
Westphal (2004b) are incorporating different
institutional elements into prevailing
economics accounts of how stock markets
actually operate.
This said, further progress along these
lines may not be as smooth as some would
like. Problems in developing a more produc-
tive synthesis will inevitably arise from
underlying tensions between the ‘culture of
economics,’ the ‘culture of institutional
theory’ and the ‘culture of the integrative
domains.’ What is ultimately required is an
agnostic blending of the irrational and the
rational elements of organizational issues.
However, whereas economists are becoming
more open to the prospects of constraints
operating on rationality (witness the rise
of behavioral economics), they are less
interested in approaches that begin with
the notion that the majority of observed
568 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
organizational behavior sits outside the
purview of rational calculus. We require an
agnostic blending of a respect for social
structural constraints on action with the
notion that organizational actors strive to be,
and indeed can be quite purposeful at times.
In this respect, institutional theorists are too
often skeptical of research that adopts the
latter orientation. All told, fundamental ten-
sions between the core disciplines may retard
the development of a productive synthesis
within either mainstream economics or soci-
ology journals.
This leaves journals devoted to organiza-
tions and strategy as outlets for integrative
research. However – and especially in
respect of work that addresses the pre-
conscious institutional influences – we
require research that embraces both goal-
directed action and genuinely emergent
organizational outcomes. Whereas organiza-
tional research is amenable to finding some
balance between rational and (seemingly)
irrational bases of action, it has a bias toward
studying problems faced by managers and a
concomitant tendency to speak to how indi-
vidual actors might ‘effectively manage’
their institutional constraints. This bias may
push integration attempts away from
effectively addressing the pre-conscious
influences that emanate from the taken-
for-granted elements in the institutional
environment. Note in this respect that organi-
zational ecologists once had a hard time con-
vincing managerial audiences (and therefore
journals) that most organizational change
occurs through selection and not purposeful
adaptation. They therefore published much
of their early research in sociology journals.
Institutional theorists who are working
Scott’s (1995) cognitive pillar might have a
similarly hard time getting these same audi-
ences to accept the premise that managers
‘tend to do x because they really don’t know
any better.’
Consider also that as the more economic-
oriented, institutional and organizational
scholars begin to find common theoretical
ground, they will increasingly face pressures
to conduct and interpret empirical research
that speaks to the emerging integrative
insights and explanations. Here, economists’
preferences for deductive theorizing leading
to archival studies that validate predictions
will come up against institutional theorists’
preferences for qualitative research that cap-
tures the salient nuances of prevailing institu-
tional environments. Without recourse to
common methodologies, the groups run the
risk of speaking and theorizing in more
similar terms while observing and drawing
inferences from the organizational world in
incompatible ways. We have seen this in the
institutional theorists’ discomfort with an
exclusive reliance on measuring cognitive
legitimacy with counts of the number of
organizations adopting a given organization
form or practice (Baum & Powell, 1995;
Hannan & Carroll, 1995). These concerns
were countered by claims that more nuanced
approaches do not lend themselves to the
generalizability that more positivist scholars
seek (Hannan & Carroll, 1995). It is also
evident in similar concerns about using
period dummy variables to account for vary-
ing institutional influences. While the justifi-
cation for the expected period effects may be
strong and drawn from the kind of contextual
knowledge favored by institutional theorists,
the context-specific interpretation of these
period effects also tends to limit generaliz-
ability while suppressing the richness inher-
ent in the underlying data.
If one of the latent impediments to a more
satisfying integration of institutional and
economic theorizing relates to different pre-
ferred modes of empirical analysis, then
there may be some hope for further advances.
We are beginning to see developments on the
empirical front by ecological, network and
economic sociologists who are conducting
empirical work in a manner that is quite
acceptable to those trained in economics. By
capturing institutional ideas in network
models and methods, or institutional con-
structs with variables that are amenable to
large-scale archival analysis (without
recourse to idiosyncratically explained, or
 CHARTING PROGRESS AT THE NEXUS OF INSTITUTIONAL THEORY AND ECONOMICS
history-specific period effects) these scholars
are at least challenging economists to think
differently about the organizational and
market phenomena that they are wont to
study. This said, the concern among institu-
tional theorists is that even these approaches
are not sufficiently nuanced to capture the
relevant details of prevailing institutional
environments. What we need are large-scale
archival techniques that also allow
researchers to capture and model the nuance
and detail of institutionally-relevant data. In
this respect, recent developments in text and
discourse analysis may offer potential for a
more effective empirical synthesis. Mohr
(1998) summarized the many techniques
available to those trying to discern and inter-
pret patterns from text-based data or from
verbal protocols. These approaches aim to be
faithful to the richness of the sources from
which meaning structures are derived and to
offer interpretations of the observed struc-
tures that are themselves generalizable. As
such, they offer one means to bridge the
qualitative-archival divide that currently sep-
arates institutional and economic researchers.
An excellent example of this kind of work is
Hsu’s (2006) analysis of evaluative schemas
in the U.S. film industry. By analyzing text
extracted from a large number of movie
reviews published over many years, she is
able to offer insights about how variance in
the structure of these reviews (predictably)
influences observed market behaviors.
Assuming that more empirically-oriented
scholars are prepared to spend the time and
effort that is required to assemble such
detailed datasets, and assuming that they are
willing to maintain a proper balance between
preserving the nuance found in the
underlying institutional data while seeking
theories, and explanations that are
generalizable to other contexts, these
techniques offer the promise of more integra-
tive empirical research to complement any
emerging synthetic theories.
In closing, let me stress that the integration
of economics and institutional theory must
progress at a healthy pace. This is due to the
569
simple fact that boundedly rational organiza-
tional actors do behave purposefully, and
they do act and make choices within institu-
tional contexts, where much is taken for
granted and where external pressures
do render certain otherwise efficiency-
enhancing options unattractive. The real
question is not whether these statements are
true, but rather how these actors go about
reconciling the different inducements and
constraints to generate the outcomes that
organizational scholars are then called upon
to observe and explain. It would be sad (even
ironic) if we were unable to tap the colle-
ctive rationality of these two scholarly
communities because of our failure to
examine those things that we
inefficiently take for granted, or because
we fail to appreciate and overcome the
powerful external forces that constrain
the operation of our respective scholarly
communities.
ACKNOWLEDGMENTS
The author would like to thank Royston
Greenwood and Christine Oliver for guid-
ance and feedback that led to improvements
in this chapter.
NOTES
1 Moreover, the prospective mediating group –
the organizational ecologists – would be content
with the empirical generalizability of evolution and
change as a density-driven process.
2 Blinder (Blinder, Canetti, Lebow and Rodd,
1998) is one economist who sought to gain some
empirical traction in this manner. Growing frustrated
by a growing number of competing and theoretical
explanations for price stickiness, he set out to survey
those who actually set prices in order to determine
what they actually consider when setting prices.
3 In a similar manner, Ahmadjian and Robinson
(2001) propose that rational and institutional influ-
ences can operate on different aspects of the same
phenomenon. In an analysis of organizational downsiz-
ing, they show that economic factors account for
570 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
whether downsizing occurs but that institutional theory
is required to account for the pace at which it occurs.
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Ecologists and Institutionalists:
Friends or Foes?
Heather A. Haveman and Robert J. David
In this chapter, we consider the web of rela-
tions between institutional and ecological
analysis of organizations. These research tra-
ditions are very similar in some ways,
notably that foundational articles for both
were published in the same year (Meyer and
Rowan, 1977; Hannan and Freeman, 1977).
Yet, in other ways, they are remarkably dif-
ferent, as evidenced by vociferous debates
between ecologists and institutionalists (e.g.,
Carroll and Hannan, 1989a vs. Zucker, 1989
vs. Carroll and Hannan, 1989b; Hannan,
Carroll, Dundon, and Torres, 1995 vs. Baum
and Powell, 1995 vs. Hannan and Carroll,
1995). Given their concurrent origins and the
combination of similarity and difference in
their lived histories, it is not surprising that
these two research traditions have been
sometimes contrasted and other times com-
bined. In this chapter, we will review how
and when ecological theory has been used in
contrast to or in combination with institu-
tional explanations, and suggest how they
might be fruitfully combined in future
research.
24
Our title poses a question about the nature
of the relationship between ecology and
institutionalism. Depending on whom you
ask, you will get divergent answers to this
question. Some will say that ecologists
and institutionalists are happy bedfellows
because they ask similar questions about the
nature and functioning of organizations and
they provide similar answers (e.g., Fligstein
and Dauter, 2007). Both sets of scholars
attend to many of the same concepts, notably
legitimacy and organizational form, and seek
to explain change and stability in organiza-
tional systems. Moreover, both sets of schol-
ars tend to conduct longitudinal analysis of
original data on collections of organizations –
populations in the case of ecologists and
fields in the case of institutionalists. Such
basic similarities are not surprising, as both
ecology and institutionalism emerged as
corrections to the rationalist approach preva-
lent in the 1960s and early 1970s, which
focused on the design and management of
efficient organizations, and both directed
attention towards the external environment
574 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and away from internal organizational func-
tioning.
But when faced with the same question,
other scholars will wonder whether ecologi-
cal analysis is inconsistent with institutional-
ism (e.g., Zucker, 1989; Baum and Powell,
1995). Perhaps the most obvious divide
stems from the fact that ecologists investigate
highly abstract models of population evolu-
tion and organizational outcomes, while
institutionalists seek nuanced explanations
that are sensitive to the specifics of time and
place. This yields, by necessity, a difference
in relationships between theory and data:
research in organizational ecology is driven
by a desire to test and extend formal models
with general applicability, while research in
the institutional tradition is driven by a desire
to explain particular empirical phenomena.
This divergence in research activity stems
from a profound difference in theoretical
perspective: organizational ecology focuses
on demography (numbers of organizations
and their vital rates), while institutional
analysis focuses on culture (norms, values,
and expectations) and its manifestations
(rules, regulations, conceptions, frames, and
schemas).
To discover our own take on the vexing
question of whether ecologists and institu-
tionalists are friends or foes, you must read
on. To convince you that our answer is
correct, we proceed in stages. We first define
the nature and scope of ecological analysis.
After briefly reviewing the institutional
perspective, we reflect in detail on how, and
how well, ecology and institutionalism get
along intellectually. Our assessment of
convergence and divergence encompasses
research questions, assumptions, predictions,
and methods; we pay particular attention to
those hard-to-define, harder-to-defend, yet
critical issues that are related to taste and
style. After answering the question posed in
our title, we conclude by suggesting how
scholars in both traditions can benefit from a
closer relationship.
Some disclosure is in order before we
begin. Heather is an organizational theorist
who, when surrounded by ecologists, feels
like a stout-hearted institutionalist, and when
surrounded by institutionalists, feels like a
died-in-the-wool ecologist. Robert is an
organizational theorist who has delved into
both traditions, yet never feels quite like a
‘pure’ ecologist or a ‘pure’ institutionalist.
We are thus members of both communities,
in varying proportions, depending on time of
day, question at hand, and surroundings. But
at heart, we are members of a broader com-
munity – organizational sociologists. As
such, our goal is to understand formal organ-
izations, the building blocks of all modern
societies and the most powerful actors in
those societies (Coleman, 1974; Perrow,
1991). We are happy to achieve this objective
with any implements that we can use skill-
fully – including, but not limited to, institu-
tional and ecological tools.
WHAT IS ORGANIZATIONAL
ECOLOGY ANYWAY?
Organizational ecologists wonder ‘why
are there so many kinds of organizations?’
and seek to understand the distribution of
organizations across different environments
(Hannan and Freeman, 1977: 936). To this
end, ecologists have adapted and applied the-
ories and formal models of population biol-
ogy and human demography to explain the
evolution of organizational systems – that is,
to explain rates of organizational founding,
failure, growth, performance, and change.
Ecologists begin with the core assumption
that understanding organizational diversity
requires ‘population thinking’ (Hannan and
Freeman, 1989: 15). Populations are aggre-
gates of organizations that share a common
dependence on material and cultural environ-
ments. Empirically, populations have been
identified as sets of organizations that pro-
duce similar goods or services, use similar
resources, and have similar identities.
Organizational diversity increases when new
populations emerge and expand in size;
 ECOLOGISTS AND INSTITUTIONALISTS: FRIENDS OR FOES?
it declines when existing populations
decrease in size and become extinct.
In the paragraphs below, we briefly review
the main assumptions underlying ecological
analysis and the main lines of research.1 Our
commentary involves four areas: density
dependence, resource partitioning, structural
inertia, and organizational identity. We
discuss each in turn.
Density dependence
The basic model of organizations’ vital rates
is density dependence, which proposes that
organizational founding and failure depend
on population density, meaning the number
of organizations in a population. When den-
sity is low, increasing density enhances the
legitimacy, or taken-for-grantedness, of the
population; thus, at low levels of density,
increases in density cause founding rates to
rise and failure rates to fall. At higher levels
of density, however, more organizations vie
for resources, so competition becomes more
intense. At the same time, increasing
numbers of organizations provide only incre-
mental legitimacy benefits. Thus, as density
increases, competition begins to overwhelm
legitimation as the primary mechanism
driving vital rates. At high levels of density,
therefore, further increases in density cause
founding rates to fall and failure rates to rise.
Over the full range of density – from very
low to very high – this logic predicts
non-monotonic effects on vital rates, specifi-
cally an inverted-U-shaped relationship
between density and founding rates, and a
U-shaped relationship between density and
failure rates. The earliest empirical investiga-
tions of the density-dependence model were
Hannan and Freeman’s (1987, 1988) studies
of labour unions in the United States. They
found that unions’ founding and failure rates
followed the predicted non-monotonic pat-
terns. Many studies of other organizational
populations have yielded similar effects
(e.g., Carroll and Hannan, 1989a; Hannan
and Carroll, 1992).
575
Ecologists have extended and refined the
basic density-dependence model. One
approach involves assessing the effect of
density across subpopulations defined along
such key dimensions of organizational form
as goals, size, technology, and location. For
example, a study of competitive interactions
(those that harm one or both parties) and
mutualistic interactions (those that benefit
one or both parties) between commercial
(for-profit) and mutual (non-profit) tele-
phone companies in Iowa disaggregated pop-
ulation density according to technology and
location relative to the focal organization
(Barnett and Carroll, 1987). This analysis
revealed that the non-local density of both
commercial and mutual telephone companies
raised failure rates, as did the local density of
commercial companies. These results indi-
cate purely competitive interactions. Only
the local density of mutual companies con-
tributed to mutualistic interactions. Density
has been disaggregated by subpopulation
in studies of organizations as varied as
breweries (Carroll and Swaminathan, 1992),
health-care organizations (Wholey, Christianson,
and Sanchez, 1992), and credit unions
(Barron, West, and Hannan, 1994), demon-
strating the broad applicability of this
approach.
Another way to disaggregate density is to
allow for the fact that organizations in a pop-
ulation often differ in degree rather than
kind. To reflect this, some ecologists have
followed McPherson (1983) and assessed
similarities (and differences) between popu-
lation members by how much their domains
overlap (or not) along some dimension. One
such study showed that Manhattan hotels
experienced more intense competition from
hotels that overlapped in terms of size, geo-
graphic location, and price (Baum and
Mezias, 1992). Going even further, a study of
day-care centres in Toronto showed that
competition and mutualism varied with
overlap in the ages of children enrolled: a
high degree of overlap between a focal day-
care centre and other centres raised failure
rates, while a high degree of non-overlap
576 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
lowered failure rates (Baum and Singh,
1994).
Resource partitioning
A related stream of research focuses on com-
petition and mutualism between organiza-
tions that serve a wide range of clients with a
diverse array of products (‘generalists’) and
organizations that focus on a more limited
clientele, offering them a narrower set of
products (‘specialists’). The basic argument
is that when there are economies of scale and
a resource distribution with a single rich
centre and poor peripheral regions, the
resource ‘space’ (the combination of inputs
and demand for output) becomes partitioned,
with generalists occupying the centre and
specialists the periphery (Carroll, 1985;
Carroll, Dobrev and Swaminathan, 2003).
This happens because generalists compete
with one another to control the resource-rich
centre by offering generic products with
broad appeal. Specialists, meanwhile, avoid
competing with generalists in the market
centre, instead exploiting peripheral regions
by serving small groups of clients with idio-
syncratic tastes. Because economies of scale
favour large organizations, the generalist
subpopulation concentrates; a smaller number
of larger generalists competes for the market
centre. As this happens, generalists focus
more tightly on the market centre and aban-
don more of the periphery to specialists. The
upshot of this partitioning of the resource
space between a core occupied by generalists
and a periphery occupied by specialists is
that increasingly intense competition
between generalists leads to not only higher
failure rates for generalists, but also lower
failure rates and higher founding rates for
specialists. Like the density-dependence
model and its offshoots, the resource-
partitioning model has been tested on a wide
array of organizations, including newspapers
(Carroll, 1985; Boone, Carroll and van
Witteloostuijn, 2002), auditors (Boone,
Broecheler and Carroll, 2000), breweries
(Carroll and Swaminathan, 1992, 2000),
wineries (Swaminathan, 1995), and automo-
bile manufacturers (Dobrev, Kim and
Hannan, 2001).
Inertia
Organizational ecology proceeds from the
assumption that the core features of organi-
zations change slowly, if at all, because of
strong inertial pressures (Hannan and
Freeman, 1984). Eight constraints on adapta-
tion are proposed, four internal and four
external (Hannan and Freeman, 1984). The
internal constraints are investment in plant,
equipment, and specialized personnel; limits
on the internal information received by deci-
sion-makers; vested interests; and organiza-
tional history, which justifies past action and
prevents consideration of alternatives. The
external pressures for stability are legal and
economic barriers to entry and exit; con-
straints on the external information gathered
by decision-makers; legitimacy considera-
tions; and the problem of collective rational-
ity and the general equilibrium. All of these
pressures favour organizations that perform
reliably and can account rationally for their
actions, which in turn requires that organiza-
tional structures be highly reproducible – that
is, unchanging (Hannan and Freeman, 1984).
If inert organizations are favoured over
changeable ones, inert organizations will be
less likely to fail.
The structural inertia thesis does not imply
that organizations never change; rather, it
implies that when organizations do change,
resources are diverted from operating to reor-
ganizing, reducing effectiveness and increas-
ing the likelihood of failing. Ecologists
distinguish between two consequences of
change: process effects, which stem from the
inevitable frictions generated by undertaking
change and which are inherently deleterious,
and content effects, which derive from the
altered fit between changed organizations
and their environments, and which may be
good if fit to the environment is improved, or
 ECOLOGISTS AND INSTITUTIONALISTS: FRIENDS OR FOES?
bad if fit is worsened (Barnett and Carroll,
1995). Notwithstanding the grim prognosis
for organizational change, some of the more
optimistic ecologists have investigated the
possibility that in some circumstances,
organizations can adapt and change can be
beneficial, such as when organizations
diversify after large-scale shifts in external
conditions (Haveman, 1992), or when organ-
izations’ constituencies support the content
of change and are willing to supply resources
to effect change (Minkoff, 1999). Others
have shown that ties to state and community
institutions, which provide resources and
legitimacy, can buffer organizations from the
deleterious effects of change (Baum and
Oliver, 1991). Despite these important limi-
tations on the inertia hypothesis, empirical
analysis generally shows that change harms
organizations (Barnett and Carroll, 1995;
Carroll and Hannan, 2000: 357–380).
Change may be harmful, but organizations
do often change. Change exhibits momen-
tum: the more organizations have changed in
the past, the more they are likely to change in
the future because they have learned how to
change (Amburgey and Miner, 1992;
Amburgey, Kelly and Barnett, 1993; Greve,
1998). Change is often driven by prior per-
formance, assessed relative to goals, and by
changes made by rivals, which in the aggre-
gate alter an organizational population’s
demography (Greve, 1998). If the forces that
drive change (notably performance) also
drive failure, analyses of change and failure
must account for endogeneity. Doing so
reveals that even though change causes per-
formance to decline and the chance of failure
to rise, there is a big difference between
well- and poorly-performing organizations.
Poorly-performing organizations may benefit
from change, but well-performing ones are
usually harmed (Greve, 1999).
Because older and larger organizations are
expected to be more inert and thus less likely
to fail, empirical research has often focused
on the effects of age and size on organiza-
tional failure. Failure rates have been found
to decline with age in studies of many kinds
577
of organizations, including newspaper
publishers (Carroll and Delacroix, 1982;
Freeman, Carroll and Hannan, 1983;
Amburgey et al., 1993), labour unions
(Freeman et al., 1983), and semiconductor
manufacturers (Freeman et al., 1983). But
these studies confounded the effects of age
with those of size (Barron et al., 1994;
Hannan, 1998). Findings that failure rates
decline with age may be spurious because
there is a positive correlation between size
and age, and a negative effect of size on fail-
ure. This was clear in an analysis of New
York credit unions: age on its own had a neg-
ative effect on failure, but after including size
in the analysis, the effect of age became pos-
itive, while the effect of size was negative
(Barron et al., 1994). Similarly, size damp-
ened failure rates for all but the largest life
insurance companies in New York, while
age increased failure rates (Ranger-Moore,
1997). The current consensus is that failure
rates generally decline with size and increase
with age (Hannan, 1998). However, the effect
of age, after controlling for size, may be non-
linear – increasing in the first few years after
founding, as fledgling organizations use up
their initial stores of resources, then decreas-
ing, as organizations learn how to operate
efficiently and develop solid reputations
(Levinthal, 1991).
Organizational form as identity
The newest strand of ecological theory
involves analyzing organizational forms as
identities or social codes, which are ‘recog-
nizable patterns that take on rule-like stand-
ing and get enforced by social agents’ (Pólos,
Hannan and Carroll, 2002: 89; see also
Hannan, Pólos and Carroll, 2007). Such
socially-coded identities comprise both rules
of conduct and signals to internal and exter-
nal observers. Rules of conduct provide
guidelines for members of a population by
delimiting what they should and should not
be and do, while signals generate a cognitive
understanding about the population because
578 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
they define what observers understand the
members of an organizational population are
and what they do.
Thinking about organizational form as
identity has benefited the other strands of
ecological analysis. Consider resource parti-
tioning first. An analysis of the identities and
competitive tactics of U.S. breweries showed
how and why established firms (mass-pro-
ducer breweries) that are under siege by
insurgents (microbreweries and brewpubs)
have a limited ability to adopt the beneficial
features of their new rivals (Carroll and
Swaminathan, 2000). Quite simply, it is diffi-
cult for organizations with established identi-
ties to present themselves as entirely
different kinds of organizations, even when
their identities are based on intangibles such
as perceived authenticity. In a similar vein, a
study of American feature films showed that
there is a fundamental tradeoff between
appealing to a broad customer base (being a
generalist) and targeting a more focused base
(being a specialist): films pitched in multiple
genres attracted larger audiences but
were less appealing than films pitched in a
single genre, because audiences found
multi-genre films difficult to make sense of
(Hsu, 2006).
For the density-dependence model, analy-
ses of identities among disk-array producers
showed that, contrary to what happens when
classic density-dependent competition and
legitimation operate, increases in the density
of disk-array producers did not legitimate the
disk-array-producer form (McKendrick and
Carroll, 2001; McKendrick, Jaffee, Carroll
and Khessina, 2003). Most disk-array
producers had heterogeneous origins and
continued to derive their primary identities
from other fields. These heterogeneous
origins and persistently derivative identities
made it impossible for the disk-array-
producer form to cement its own distinctive
identity. Following this logic, only increases
in the density of firms with focused identi-
ties, not increases in total density, should
result in the establishment of a distinct
organizational form.
With regard to inertia, research on young
high-technology firms in California showed
that the content effects of change are most
hazardous when they involve shifts in iden-
tity (Hannan, Baron, Hsu and Koçak, 2006).
Growth in market capitalization slowed and
failure rates rose following changes in
human-resource blueprints – a core aspect of
these firms’ identities. In contrast, outside
CEO succession depressed growth in market
capitalization but did not affect failure rates.
This study redirects attention from the inter-
nal consequences of change – disruption of
routines and structures – to the external con-
sequences, in particular, to what happens
when organizations violate the expectations
of external observers (here, investors). Thus,
it paves the way for empirically assessing the
content effect of change, to complement pre-
vious studies of the process effects of change
(e.g., Amburgey et al., 1993; Greve, 1999).
Summary
The great strength of the ecological tradition
is its high level of paradigmatic consensus
(Pfeffer, 1993). Ecologists agree on what
outcomes to study (founding, failure, growth,
performance, and change), what explanatory
factors to consider (the number of organiza-
tions of various (sub)forms, as well as their
sizes, ages, locations, technologies, net-
works, and identities), and what analytical
strategies to employ (primarily quantitative
analysis of original data sets covering entire
populations of organizations over extended
periods of time). Among theories of organi-
zations, ecology displays the highest degree
of logical rigour. Indeed, ecology has bene-
fited from several logical tests: of resource
partitioning (Péli and Nooteboom, 1999),
inertia (Péli, Bruggeman, Masuch and
Ó Nualláin, 1994; Hannan, Pólos and Carroll,
2003), and density dependence (Kamps and
Péli, 1995). These tests have revealed incon-
sistencies and incoherencies in natural-
language statements of ecological theory and
so paved the way for theoretical refinements.
 ECOLOGISTS AND INSTITUTIONALISTS: FRIENDS OR FOES?
In sum, because organizational ecologists
have always built on and refined each other’s
work, they have accumulated much knowl-
edge about organizational dynamics.
But the strength of the ecological research
programme reveals a weakness: precisely
because it is such a ‘normal-science’
activity, some find it too narrow to interest
anyone except ecologists themselves (e.g.,
Hedström, 1992). As van Witteloostuijn
(2000: v) put it, organizational ecology has a
‘relatively small influence outside the inner
circle of its own parish’. Narrowness may
overtake this paradigm because much work
clarifies and refines the basic theory without
extending it in truly novel directions; as a con-
sequence, ecologists’ work rarely intersects
with – or draws the interest of – scholars in
other research traditions. The marginalization
of organizational ecology is revealed in analy-
ses of submissions to the Organization and
Management Theory Division of the
Academy of Management Annual Meetings of
2004 and 2005 (Thompson, 2004; Davis,
2005). According to author-assigned key-
words, which could indicate either theory or
phenomenon, a relatively small number of
papers labelled as ‘ecological’ were submit-
ted, far fewer than the number of papers
labelled as ‘institutional’. Perhaps more
important, organizational ecology occupied a
relatively peripheral position in the network of
references to other perspectives and phenom-
ena, as it was used in combination with few
other perspectives and it was used to
explain relatively few phenomena. This
situation is unfortunate, given ecology’s
many theoretical advances and empirical
successes.
HOW DO WE UNDERSTAND
INSTITUTIONAL ANALYSIS?
Before comparing institutional analysis of
organizations to ecology, we want to make
sure we’re all ‘on the same page’, so we offer
our own brief assessment of the nature and
579
scope of organizational institutionalism (for
a more detailed review, see Greenwood
[Introduction, this volume] or Scott
[1995/2001]). Like ecological analysis, insti-
tutional analysis of organizations can be
broken down by subject area. Three of the
most important are legitimation and institu-
tionalization, isomorphism and diffusion,
and strategic action. We discuss each in turn.
Legitimation and
institutionalization
Legitimacy is the central concept in institu-
tional analysis. Organizations are legitimate
when they are comprehensible and taken for
granted as the natural way to achieve some
collective goal (Berger and Luckmann,
1967), when they are justified and explained
on the basis of prevailing values, role
models, and cultural accounts (Meyer and
Rowan, 1977; Douglas, 1986), when they are
sanctioned or mandated by authorized actors
(DiMaggio and Powell, 1983), and when
those involved cannot even conceive of alter-
natives (Zucker, 1983). Legitimacy can rest
on any of three foundations: regulative,
which includes the laws and administrative
guidelines that constitute the basic rules gov-
erning relationships within and between
organizations; normative, meaning ‘expert’
sources of information and value judgments
about the nature of organizations; and cogni-
tive, meaning shared perceptions of organ-
ized social activity (Scott, 1995 [2001]).
Highly legitimate forms of organization are
highly institutionalized – perceived as objec-
tive and exterior facets of social life (Berger
and Luckmann, 1967). The greater the legiti-
macy attributed to an organizational form,
the less any member of that form will require
active justification and the more it will be
taken for granted and accepted by observers.
Legitimacy improves access to resources and
acceptance from customers, and thus con-
tributes to organizations’ ability to persist
(Meyer and Rowan, 1977). Empirical
research has supported these ideas for many
580 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
kinds of organizations, including hospitals
(Ruef and Scott, 1998), biotechnology start-
ups (Stuart, Hoang and Hybels, 1999), day-
care centres (Baum and Oliver, 1991), and
banks (Deephouse, 1996).
The flip side of institutionalization is dein-
stitutionalization: erosion of activities or
practices (Oliver, 1992). And the flip side of
legitimation is delegitimation: reduced
acceptance of activities or practices. Some
scholars see the continuance of structures,
rules, and routines as inherently problematic,
and see deinstitutionalization as an inevitable
process (e.g., Covaleski and Dirsmith, 1988;
Zucker, 1988) Deinstitutionalization can be
precipitated by political, functional, or social
forces (Oliver, 1992). Some forces for
deinstitutionalization are internal to the focal
organization, including increasing workforce
diversity, declining performance, and execu-
tive succession. For instance, poor per-
formance triggered the abandonment of
permanent-employment guarantees and
increased downsizing by Japan firms; more-
over, the rate of abandonment increased with
the number of firms downsizing (Ahmadjian
and Robinson, 2001). Other forces for dein-
stitutionalization are external, such as tech-
nological innovation, shifts in the polity or
general culture, economic booms or busts,
and changes in regulation. For example, the
decline of large conglomerates in the 1980s
was precipitated by shifts in attitudes and
beliefs about the nature of the firm (Davis,
Diekmann, and Tinsley, 1994). The idea of
the firm as a bounded social entity, analogous
to a sovereign body which could not be
dismembered, lost legitimacy in the face of
evidence that conglomerates were inefficient;
as a result, many were taken over and broken
up. Similarly, several forms of savings-
and-loan associations, each embodying
a different set of opinions, beliefs, and judg-
ments, were extinguished by a combination
of technical pressures (changes in human
demography and employment patterns)
and institutional pressures (changes in
attitudes towards bureaucracies precipi-
tated by the Progressive movement)
(Haveman and Rao, 1997; Haveman, Rao
and Paruchuri, 2007).
Isomorphism
Institutionalists wonder why organizations
are so similar (DiMaggio and Powell, 1983).
Accordingly, one of the most important ideas
in institutional analysis is that of isomor-
phism (literally, ‘same shape’). As communi-
ties of organizations evolve, a variety of
forces (interorganizational power relations,
the state and professions, and competition)
promote isomorphism within sets of organi-
zations that either play similar roles or are
tied directly to each other. There is a logical
connection between isomorphism and legiti-
macy. The more prevalent an organizational
structure, practice, or tactic, the more legiti-
mate it is. Therefore, one indicator of legiti-
macy is the spread of organizational features,
which increases isomorphism within fields
(Tolbert and Zucker, 1983). Moreover, the
three bases of legitimacy map neatly onto the
three processes driving isomorphism: cogni-
tive legitimacy onto mimetic processes, reg-
ulative legitimacy onto coercive processes,
and normative legitimacy onto normative
processes (Scott, 2001).
Interest in isomorphism has produced
many, many studies of the diffusion of
formal structures and practices across organi-
zational fields, encompassing all three
engines of diffusion. Coercive pressures
accelerate diffusion; for instance, structures
mandated by the state diffuse more rapidly
than structures encouraged but not mandated
(Tolbert and Zucker, 1983). Although state
regulations appear to be simple coercive
forces, reality is often more complex, as
many state regulations allow discretion in
their interpretation and application (Dobbin
and Sutton, 1998). For example, in response
to legal mandates against employment
discrimination, firms experimented with
several ways to demonstrate compliance –
creating both new rules and new units
(Edelman, 1992) – until court rulings showed
 ECOLOGISTS AND INSTITUTIONALISTS: FRIENDS OR FOES?
one way – formal, merit-based rules govern-
ing hiring and promotion – to be suffi-
cient, after which the sanctioned approach
diffused widely (Dobbin, Sutton, Meyer and
Scott, 1993).
Normative pressures often trump coercive
pressures, because state regulations often
allow discretion in their interpretation and
application (Edelman, 1992; Dobbin et al.,
1993). Take, for instance, the diffusion of
human-resources practices among U.S.
firms. Human-resources managers and
labour lawyers used the ambiguity inherent
in employment law to promote particular
solutions – those that would solidify their
power – and discourage others (Dobbin and
Sutton, 1996; Sutton and Dobbin, 1998).
Thinking more broadly, the civil-rights
mandates of the 1960s created a normative
environment that led employers to adopt
several human-resources procedures, even in
the absence of formal legal sanctions
(Edelman, 1990).
Mimetic pressures are ubiquitous but
subtle. In the early stages of diffusion,
adopters of new structures and practices tend
to be those facing technical problems of con-
trol and co-ordination they hope will be
solved by these innovations; later, however,
as the innovations become widespread, con-
nections between technical rationality and
adoption are attenuated and the causal engine
shifts from technical rationality to blind imi-
tation, as innovations become taken for
granted as the ‘right’ way to do things
(Tolbert and Zucker, 1983; Baron, Dobbin
and Jennings, 1986). There is widespread
evidence of mimetic diffusion: corporations
were more likely to adopt the multidivisional
form when others in their industry had
done so (Fligstein, 1985), savings and loans
were more likely to expand into new service
areas when large and profitable firms
were active there (Haveman, 1993), acquir-
ing firms were more likely to select invest-
ment banks used by large and profitable
others (Haunschild and Miner, 1997), and
hospitals were more likely to adopt standard-
ized (as opposed to customized) total quality
581
management (TQM) programmes as TQM
adoption increased (Westphal, Gulati and
Shortell, 1997).
Strategic action
Organizations do not simply react to environ-
mental demands; instead, they are often
proactive and control their environments.
Recognizing this, institutionalists place con-
formity on a continuum of responses that
includes compromise, avoidance, defiance,
and manipulation (Oliver, 1991). Indeed,
organizations can avail themselves of many
different tactics for gaining legitimacy (con-
form to, select, or manipulate the environ-
ment), maintaining legitimacy (police
internal activity, eschew obvious appeals for
legitimacy, and stockpile goodwill), and
repairing legitimacy (offer normalizing
accounts, restructure, and (our favourite!)
don’t panic) (Suchman, 1995). These ideas
pave the way for investigating when con-
formity will or will not occur, and assessing
the effectiveness of various strategic
responses.
Empirical work on strategic action often
investigates how rhetoric is used to legiti-
mate change. For example, tracing the evolu-
tion of corporate takeovers from 1950
through 1985 revealed that rhetoric created
powerful new patterns of meaning, which in
turn affected the status attributed to buyers
and target firms alike (Hirsch, 1986). As the
practice of hostile takeovers diffused, the
language used to describe them became more
positive and more complex (borrowing from
more genres; evaluating bidders and targets).
Moreover, takeovers came to be framed as
violent when the bidder was outside the cor-
porate establishment, but dispassionately and
benignly when the bidder was an insider. In
the same vein, a study of attempts to repair
legitimacy after a public-relations crisis in
the cattle-ranching industry demonstrated the
efficacy of verbal accounts (Elsbach, 1994).
Similarly, a study of accounting firms
showed that the profession was ‘framed’ as
582 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
being under threat and that change was thus
natural, almost inevitable; thus, rhetoric por-
trayed the broadening of accounting firms’
professional scope as a solution to evolving
client needs and heightened competition
(Greenwood, Suddaby and Hinings, 2002).
Strategic actors in accounting deployed
many rhetorical strategies to legitimate mul-
tidisciplinary partnerships: appealing to
myths of progressive rationality, suppressing
contradictions, and emphasizing consistency
with professional values (Suddaby and
Greenwood, 2005). Finally, institutional
entrepreneurs in the HIV/AIDS-treatment
field framed new practices of consultation
and information exchange among commu-
nity organizations and pharmaceutical com-
panies in ways that integrated the interests of
many different stakeholders and that were
consistent with existing routines (Maguire,
Hardy and Lawrence, 2004).
Strategic action is especially obvious
when people are trying to create new kinds of
organizations. Such institutional entrepre-
neurship requires the skillful use of resources
to overcome skepticism and persuade others
to believe entrepreneurs’ representations of
reality and thus to support their new ventures
(DiMaggio, 1988; Fligstein, 1997). For
example, art historians and their patrons
co-operated in the nineteenth century to
develop art museums as a distinct cultural
form by creating a framework that distin-
guished vulgar art from high art and by
establishing non-profit enterprises to show-
case and conserve their cultural capital
(DiMaggio, 1991). Product-testing organiza-
tions and consumer leagues promoted con-
sumer watchdog associations by tapping into
the growing customer-service and truth-in-
advertising movements; these institutional
entrepreneurs also linked their activities to
home-economics professors, who already
enjoyed the legitimacy accorded to academia
(Rao, 1998). Such actions conferred norma-
tive appropriateness to the new consumer-
watchdog form and shielded it from
opposition, thus allowing it to stabilize and
persist. Even individuals and groups that are
marginalized and have little power – like
women in the late nineteenth and early twen-
tieth centuries – can develop new kinds of
organizations; these ventures are most likely
to succeed when they embody familiar struc-
tures and practices (Clemens, 1997).
Summary
The strength of the institutionalist perspective
is its sweeping reach. Consider the core con-
cepts, institution and institutionalization.
Scholars working in this tradition have
claimed that institutionalization is both an out-
come, which suggests attention to stability,
and a process, which suggests attention to
change. They have identified the carriers of
institutions at multiple levels of analysis: the
routines, rules, scripts, and schemas that guide
the perceptions and actions of individuals and
small groups; local regional or demographic-
group identities and regimes; meso-level
organizations, occupations, and fields; and
society-wide norms and codified patterns of
meaning and interpretation. They have identi-
fied a wide array of mechanisms through
which institutionalization occurs: habituation,
blind or limitedly-rational imitation, norma-
tive conformity, accreditation, social obliga-
tion, and coercion. In building theory, they
have drawn not only on sociology, but also on
cognitive psychology, philosophy, and lin-
guistics. Finally, they have employed a wide
array of methodologies, ranging from ethno-
graphies and qualitative historical studies to
laboratory experiments to statistical analyses
of survey and archival data. As a result of its
breadth and flexibility, institutionalist analysis
has recently dominated submissions to the
Organization and Management Theory
Division of the Academy of Management
Annual Meetings (Thompson, 2004; Davis,
2005). Institutional analysis was also central
in the network of references to other perspec-
tives or to specific phenomena, indicating that
institutionalism was used to explain a wide
range of phenomena and was used in combi-
nation with many other perspectives.
 ECOLOGISTS AND INSTITUTIONALISTS: FRIENDS OR FOES?
But the strength provided by this broad
reach also generates a critical weakness. If
institution and institutionalization mean
everything and explain everything – change
and stability; routines, values, and norms;
intra-organizational, organizational, and
interorganizational structures and behav-
iours; cognitive, regulative, and normative
processes – then they mean nothing and
explain nothing. The institutional ‘tent’
houses a loose collection of propositions, of
varying degrees of formality, some seem-
ingly incompatible and others only tenuously
connected. For example, it is unclear when
coercive, mimetic, or normative forces
predominate, and to what extent these are
conceptually or empirically distinct phenom-
ena (Mizruchi and Fein, 1999). Given these
fundamental uncertainties, debates in
the institutionalist tradition tend to be unpro-
ductive feuds about intellectual origins
and definitions, rather than substantive
arguments about logic or evidence
(e.g., Scott, 1995 [2001] vs. Hirsch, 1997).
Institutionalists have not built systematically
on one another’s work to the same
extent that ecologists have, and the institu-
tional perspective has not accumulated
empirical successes at the same rate as
ecology has. This lack of accumulation of
knowledge happened because institutional-
ists eschewed ‘theories of the mid range’ –
logically interconnected sets of propositions,
derived from assumptions about essential
facts (axioms) and causal mechanisms
(unobservables), that yield empirically
testable hypotheses and deal with delim-
ited aspects of social phenomena (Merton,
1968: 39–72).
COMPARING ECOLOGICAL AND
INSTITUTIONAL ANALYSIS
We begin by laying out the things that make
ecology and institutionalism similar. We then
discuss the things that make them different.
We conclude by weighing similarities and
583
differences, then – finally! – answering the
question posed in our title.
Points of similarity
Ecological and institutional approaches have
as their most basic commonality their ori-
gins: both developed as corrections to ratio-
nalist and adaptationist theories that were in
use in the 1960s and early 1970s, which
assumed that those in charge of organizations
could survey the environment and determine
what the organization should do, and that
organizations could easily change their
strategies and structures, and thus improve
their performance. Both organizational
ecology and institutionalism broke with the
assumption that organizations could be
adapted to external conditions in a techni-
cally rational way. In the case of ecology,
inertial forces prevent timely adaptation;
in the institutional perspective, conforming
to institutional rules can prevent efficient
operation.
Another deep commonality – albeit one
that is often mistaken for a basic difference –
is a concern for the variety (or lack thereof)
of organizations. As we noted above, ecolo-
gists ask ‘why are there so many kinds of
organizations?’ (Hannan and Freeman, 1977:
936), while institutionalists wonder why
organizations are so similar (DiMaggio and
Powell, 1983: 148). The apparent contrast in
these questions is illusory, however, because
they point to the ends of a single continuum,
which runs from a setting in which each
organization is unique to one in which all
organizations are identical. To explain one
end of the continuum, one must explain the
other. The real questions are how much orga-
nizational variety there is and what factors
contribute to more or less variety.
These core similarities have led researchers
within the two traditions to focus on similar
constructs and to study similar phenomena:
legitimacy, organizational form, the emer-
gence and spread of new organizational
forms and features, organizational change
584 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
(or persistence), and organizational survival
or failure. Consider legitimacy: ecologists
and institutionalists alike believe that legiti-
macy is necessary for the emergence of new
organizational forms, and the proliferation
and persistence of existing organizational
forms. For ecologists, legitimacy is cognitive
in nature and accrues to an organizational
form as it increases in numbers and thus
becomes accepted as the natural way to effect
collective action (Hannan and Freeman,
1987, 1988). Institutionalists also recognize
the cognitive aspect of legitimacy, but attend
to its regulative and normative dimensions as
well (Scott, 2001). Both traditions also
emphasize organizational survival as a central
outcome of interest; this stands in contrast to
other areas of organizational scholarship,
such as strategic management, that focus on
profitability or market share. For ecologists,
organizational survival is determined by tan-
gible resource flows, whereas for institution-
alists it is rooted in the subjective assessments
of constituents. This overlapping interest in a
core set of constructs and phenomenon,
despite differences in the ways they have
been conceived and measured, forms the
basis for considerable conceptual, method-
ological, and empirical common ground.
Indeed, methodological similarity is obvi-
ous, as both sets of scholars employ original
data on collections of organizations – popula-
tions in the case of ecologists and fields in the
case of institutionalists. This empirical strategy
stands in stark contrast to much other sociolog-
ical research, where reliance on publicly-avail-
able data, especially survey data, is the norm.
Both research traditions also emphasize longi-
tudinal analysis. This contrasts with the
approach taken in other research traditions,
such as transaction-cost economics and
resource-dependence theory, both of which
tend to rely on cross-sectional data.
Points of difference
Despite these basic commonalities, there are
important differences between ecology and
institutionalism. The most basic discord
stems from their theoretical agendas.
Ecologists value parsimony and generality,
while institutionalists prefer richness and
contextual specificity. Therefore, ecologists
strive to identify broad regularities across
populations. Institutionalists, in contrast,
attempt to offer highly contextualized and
nuanced depictions of organizations or fields.
This conflict is difficult to reconcile because
it reflects a difference of taste in theorizing,
but it could be settled by careful empirical
analysis. The issue boils down to whether or
not relationships between explanatory and
outcome variables vary over time and across
contexts – clearly empirical questions. For
instance, does density dependence operate
over a population’s entire history or just
within particular periods defined by larger
forces, such as technology, social mores, and
the state (e.g., Dobbin and Dowd, 2000)?
Does the similarity (or difference) between a
focal population and related populations
affect density-dependent processes (e.g.,
Ruef, 2000; Dobrev, 2001)? And does the
nature of the organizations under study or
their context determine how inert they are
and whether change harms or helps them
(e.g., Dobrev, Kim and Carroll, 2003)?
Ecologists’ concern for parsimony and
generality has led them to follow a tight
normal-science trajectory, while institution-
alists’ concern for richness and contextual
specificity has yielded a more emergent and
diffuse research agenda. To put it more for-
mally, ecology is a collection of overlapping
theories of the mid-range, each of which
builds on a small set of assumptions and
causal mechanisms to derive empirically
testable predictions about a delimited set of
organizational outcomes. Institutionalism,
in contrast, is not really a single mid-
range theory, or even a collection of such the-
ories – despite the prevalence of the label
‘institutional theory’. Instead, institutional-
ism is a perspective – a congeries of ideas
and empirical tests of those ideas that
demonstrate the power of rules and regula-
tions; frames and schemas; and norms,
 ECOLOGISTS AND INSTITUTIONALISTS: FRIENDS OR FOES?
values, and expectations in explaining orga-
nizational genesis and functioning.
Institutionalists and ecologists also differ
remarkably in their ontological stance – their
understanding of the essential nature of the
empirical world. Basically, ecologists are
empirical realists who believe that the mate-
rial world is primary and consciousness is
secondary; thus, the material world, includ-
ing organizations and their environments,
exists outside of and independent of our
observations. In stark contrast, institutional-
ists are social constructionists (subjective
idealists) who believe that all phenomena are
mental constructions created through social
interaction; thus, the material world is sub-
jective and interior, rather than objective and
exterior. To put the difference in plainer
terms, ecologists believe that organizational
environments are ‘real’ phenomena, while
institutionalists hold that they are created by
the shared perceptions and interactions of
individuals, groups, and organizations.2
Differences in goals and philosophy lead
naturally to differences in constructs, predic-
tions, and methods. As noted above, even
though the construct of legitimacy figures
prominently in both traditions, ecologists
have focused exclusively on its cognitive
dimension, while institutionalists have vari-
ously studied its regulative, normative, and
cognitive components. There are two related
issues here: what does legitimacy mean, and
how should it be measured? According to
organizational ecologists, legitimacy is the
degree to which an organizational form is
taken for granted. To capture legitimacy,
researchers simply count the number of
organizations in the focal population.
Institutionalists recoil from this simple
approach (Zucker, 1989; Baum and Powell,
1995). They protest that legitimacy encom-
passes cognitive, normative, and regulative
dimensions, which may or may not correlate
with one another (Scott, 2001). To institu-
tionalists, a count of organizations of a given
form says little about the subjective evalua-
tions constituents make about that form.
Institutionalists therefore argue that we must
585
use contextually sensitive measures of the
three bases of legitimacy, none of which can
be reduced to simple counts: links between
the focal organizations or fields and powerful
supporting organizations or fields, such as
the state or professions; coverage of the focal
organizations or fields in the news media,
either positive or negative; and laws and reg-
ulations supporting or undermining various
forms of organization.
The last core difference between ecology
and institutionalism is that while both tradi-
tions feature quantitative analyses of longitu-
dinal data on collections of organizations,
institutionalism encompasses a greater vari-
ety of methods, including case studies of
single organizations (e.g., Ritti and Silver,
1986), qualitative historical analyses of fields
(e.g., DiMaggio, 1991; Rao, 1998), and labo-
ratory experiments of organizational mem-
bers (e.g., Zucker, 1977; Elsbach, 1994).
Ironically, the tradition most interested in
organizational diversity – ecology – displays
little diversity in its theoretical and method-
ological approaches, while the tradition inter-
ested in isomorphism – institutionalism –
displays a great deal level of diversity.
The bottom line: answer the
question already!
After surveying the nature of organizational
ecology and institutional analysis of organi-
zations, and considering their points of simi-
larity and difference, we conclude that
ecologists and institutionalists have in the
past been both friends and foes, but that they
have good reason to be far friendlier in the
future. Both sets of scholars reject the
assumption, pervasive in the late 1960s and
early 1970s and still popular today, that
organizations are pliant tools that can easily
be made to fit technical exigencies. Both sets
of scholars are centrally concerned with
explaining organizational variety, even
though they use different terms – ecologists
talk about heterogeneity, institutionalists
about homogeneity. Moreover, both sets of
586 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
scholars seek to explain organizational adap-
tation, or lack thereof, to shifting circum-
stances, even though they use different
terms – ecologists discuss inertia, institution-
alists persistence. In addition, both sets of
scholars emphasize the role of legitimacy,
although they disagree about its basis –
purely cognitive for ecologists; cognitive,
regulative, and normative for institutionalists.
Moreover, both traditions generally focus on
collections of organizations, rather than indi-
vidual organizations or subunits, although
they use different labels – ecologists talk of
populations and communities while institu-
tionalists discuss fields and sectors. Finally,
both sets of scholars take a dynamic, rather
than comparative-static, approach to
organizational phenomena and use original
longitudinal, rather than derivative cross-
sectional data.
We may be wide-eyed optimists, but we
see differences between ecology and institu-
tionalism eroding. Consider the basic unit of
analysis for ecologists and institutionalists
alike, organizational form. Ecologists origi-
nally conceived of distinct forms of organiza-
tions as having a unitary standing with
respect to the environment, and identified
them empirically through observable social
discontinuities and conventional cognitive
maps (Hannan and Freeman, 1977). In other
words, for ecologists, the difference between
forms could be deduced from observation of
their inputs and outputs. In contrast, institu-
tionalists typically classified organizations
according to their distinctive logics – the
socially-constructed sets of beliefs and
values upon which they are based. To iden-
tify a form, researchers would need to under-
stand the cultural elements upon which the
form was built (e.g., DiMaggio, 1991; Rao,
1998). This distinction between resource
flows and cultural underpinnings is disap-
pearing, as ecologists have recently come to
conceive of organizational forms as identities
or social codes (Pólos, Hannan and Carroll,
2002; Hannan, Pólos and Carroll, 2007),
which is much closer to the conception of
form used by institutionalists.
We are also hopeful because we see an
increasing number of well-executed studies
that combine ecological and institutional
arguments to gain richer insights. For exam-
ple, in a study of child-care centres, Baum
and Oliver (1991) tested the structural-inertia
hypothesis of organizational ecology by
taking into consideration sociopolitical legit-
imacy as understood by institutionalists.
They found that linkages to powerful state
actors mitigated the high failure rates of
young and small organizations. Haveman
(1993) combined ideas about density
dependence in organizations’ vital rates with
the mimetic isomorphism hypothesis to pre-
dict diversification into new markets in the
savings-and-loan industry; she found that
increases in the number of successful organ-
izations in a market drew in new entrants
until competitive effects swamped legitimat-
ing ones, at which point new entries began to
decline. Dacin (1997) found that both sheer
density and sociopolitical factors like rising
nationalism could be used in concert to
explain founding rates of Finnish news-
papers. Similarly, Wade, Swaminathan and
Saxon (1998) showed how both density
and particularistic institutional conditions –
non-uniform state-government regulation –
affected the geographic distribution of
breweries’ foundings and failures. Most
recently, David and Strang (2006) combined
insights from ecology’s resource-partitioning
model with notions of mimetic behaviour
from institutional analysis; they showed how
among management-consulting firms, gener-
alists and specialists exploited different types
of demand and reacted differently to shifts in
collective understandings regarding popular
management practices.
PRESCRIPTIONS FOR FUTURE
RESEARCH
Our final task is to offer suggestions for
readers about how to engender a more pro-
ductive exchange of ideas between the two
 ECOLOGISTS AND INSTITUTIONALISTS: FRIENDS OR FOES?
research traditions. In particular, we suggest
how scholars in each tradition can learn from
the other to improve their research.
How to live peaceably and prosper
Can institutionalists and ecologists stop snip-
ing and develop productive intellectual
exchanges? Although there is a substantial
middle ground between ecology and institu-
tionalism, important philosophical, theoreti-
cal, and empirical differences (and the
occasional dust-up over them) have pre-
vented much fruitful interaction. Indeed,
clashes between ecologists and institutional-
ists have been intense precisely because
there are such great overlaps between the
phenomena they study and close similarities
in the constructs they use to explain these
phenomena. If ecologists and institutionalists
were studying very different things using
very different ideas, the divergence in their
theoretical tastes – that is, basic preferences
for parsimony versus richness – would not
vex them so much.
Given this, how can accord be achieved?
The answer is simple: ecologists and institu-
tionalists must reach a level of consensus con-
cerning the many constructs they share, and
agreement concerning the logical and empiri-
cal relationships between them. Fuzzy con-
struct definitions open doors for fruitless
debates: ‘he-said-vs.-she-said’ situations
develop in which both parties talk past and
caricature each other, rather than talking to
and hearing each other. While some theoreti-
cal tension between the perspectives is
healthy, we are hopeful that we can escape a
situation in which ecologists seem like they
are from Mars and institutionalists from
Venus. An excellent place to start would be
legitimacy. As explained above, ecologists
and institutionalists define this construct dif-
ferently. The situation is exacerbated by the
fact that institutionalists do not agree among
themselves how to categorize the various
aspects of legitimacy – sociopolitical and con-
stitutive (Haveman et al., 2007), regulative,
587
normative, and cognitive (Scott, 2001) or
pragmatic, moral, and cognitive (Suchman,
1995) – and the fact that ecologists have been
expansive in their use of this term – talking not
just about taken-for-grantedness but also
about conformity to recognized principles or
accepted rules and standards (Aldrich and
Fiol, 1994), and normative (value) judgments
by observers (Pólos et al., 2002; Hannan et al.,
2007). This bewildering list must be win-
nowed down. What kinds of legitimacy result
from which sources, and what effect does each
have? Do different kinds of legitimacy work in
tandem or opposition? Which kinds are most
potent, when, and for which outcomes? Not
until these questions about legitimacy are
answered, along with similar questions about
other constructs central to both ecology and
institutionalism, can the research traditions
fruitfully co-exist.
How can institutionalists learn
and benefit from the experiences
of ecologists?
Our first prescription is for institutionalists to
develop a set of related theories of the mid-
range (that is, to focus on delimited and sub-
stantively important topics), in order to
accumulate knowledge (that is, to reject
some ideas and affirm others). We are not
alone in thinking this way. Institutionalists
have already produced solidly cumulative
knowledge about U.S. employers’ responses
to employee-rights legislation in the U.S.
(Edelman, 1990, 1992; Dobbin et al., 1993;
Dobbin and Sutton, 1996; Sutton and
Dobbin, 1998; Guthrie and Roth, 1999; Kelly
and Dobbin, 1999). This knowledge informs
subsequent research on the effectiveness of
organizational structures and practices in
decreasing sex and race segregation (Reskin
and McBrier, 2000; Kalev, Kelly, and
Dobbin, 2006). Notwithstanding this valu-
able example, much more could be done.
One excellent candidate for more focused
and paradigmatic theorizing is institutional
entrepreneurship – currently a ‘hot’ topic, as
588 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
evidenced by our finding of 115 citations to
DiMaggio’s (1991) pioneering paper on the
topic, and 12 articles published in 2005 and
2006 using this term in the title, abstract, or
keywords.3 Work on institutional entrepreneur-
ship presents a much needed theoretical and
empirical ‘boost’ to the generally woeful state
of entrepreneurship research more generally,
which has long been dominated by rationalist
ideas, functionalist logic, and cross-sectional
research designs. This means that institution-
alists have a great opportunity to make an
intellectual contribution. How does institu-
tional change create entrepreneurial opportu-
nity (e.g., Sine and David, 2003)? How do
entrepreneurs seize this opportunity to found
new organizations (e.g., Sine, Haveman and
Tolbert, 2005)? How do entrepreneurs modify
or create institutions to advance their interests
(e.g., Lawrence, 1999; Garud, Jain and
Kumaraswamy, 2002)? Institutionalism is
uniquely placed to address such questions in a
focused, cumulative manner that can expand
our knowledge about an important social and
economic phenomenon.
A second candidate for focused theorizing
is the diffusion of new organizational features.
This should be an easy pill to swallow, as we
have two first-rate models on which to build.
DiMaggio and Powell’s (1983) article about
institutional isomorphism explains both what
kinds of forces drive the diffusion of organiza-
tional features to create isomorphism within
institutional fields (mimetic, coercive, norma-
tive) and the mechanisms by which diffusion
operates (cohesion and structural equiva-
lence). Strang and Tuma’s (1993) article pro-
vides a detailed, integrated model of diffusion
processes, one that bridges the gap between
natural-language theory and hypothesis test-
ing. It should not be difficult to turn the growth
industry that is institutionalist studies of diffu-
sion into a true knowledge-building project.
Even if you accept our suggestions, it will
be difficult to make institutionalist research
more paradigmatic and cumulative. First, we
need to reach agreement on the meaning of
central constructs and stop using the vapid
umbrella term ‘institution.’ (See also our ideas
about how to live peaceably and prosper,
above.) Second, we must formulate more
coherent and more clearly falsifiable hypothe-
ses about relationships between constructs,
and disdain loose propositions. In other words,
we should act (just a little bit!) more like ecol-
ogists: in exchange for greater generality and
cumulative knowledge, sacrifice theoretical
ambiguity and some small degree of contex-
tual specificity. Doing so will have the benefit
of allowing some institutionalist predictions to
be disconfirmed by empirical analysis, while
others are confirmed, perhaps in contingent
formulations. Following this prescription will
also allow us to take stock of the vast institu-
tionalist output and outline scope conditions –
explicit statements of the circumstances under
which predictions do and do not hold, and the
types of phenomena that are more and less
amenable to institutional analysis.
How can ecologists learn from the
experience of institutionalists?
We offer two related prescriptions that will
refresh ecological research and return it to
the centre of organizational theory. First and
most fundamentally, we should develop
richer conceptions of organizational con-
texts, ones that are more sensitive to time and
place. In other words, we should take a page
out of the institutionalist handbook, and sac-
rifice some parsimony and generality to
acquire conceptual richness. Theoretically,
this means returning to our roots in human
ecology, as pioneered by Park and Burgess
(1921), and refined by Hawley (1950).
Empirically, it means expanding our set of
explanatory variables. Most ecological
analysis has used the characteristics of the
focal organization and the focal population to
explain organizations’ vital rates. Little
‘pure’ ecological work has considered
characteristics of the world outside the focal
population, including the state, social and
political movements, socially-constructed
technological systems, and belief systems.
Those more macroscopic explanations have
 ECOLOGISTS AND INSTITUTIONALISTS: FRIENDS OR FOES?
been the domain of institutional analysis.
Indeed, in some ways ecological analysis, as
it has been practiced to date, can be seen as
nested within institutional analysis. By this,
we mean that processes that have been the
object of ecological analysis, such as density
dependence, resource partitioning, structural
inertia, and identity valuation, seem to oper-
ate within contexts that are assumed to be
invariant in time and space (Dobbin and
Dowd, 2000). Expanding the reach of eco-
logical analysis to include forces exogenous
to the population will connect ecology to
many other research traditions: sociology of
culture, political sociology, sociology of law,
and sociology of work. There is precedent
here, as ecologists have long noted the
importance of political environments on pop-
ulation evolution (e.g., Carroll, Delacroix
and Goodstein, 1988).
Second, ecology would benefit from
greater methodological pluralism. Statistical
analyses of longitudinal archival data on
entire populations of organizations, aug-
mented by computer simulations and logical
analyses, have demonstrated the veracity of
core ecological ideas. We are now in a posi-
tion to expand our horizons in two ways.
First, we could cement our knowledge of
core causal mechanisms by gathering new
kinds of data. For example, questions about
organizational identities can be answered by
gathering data on the opinions of observers,
both internal and external, through surveys
and interviews. This is something that
innovative ecological research is beginning
to do (e.g., Carroll and Swaminathan, 2000).
Questions about inertia can be given new
life through direct observations of change
efforts in theoretically important cases –
organizations that are either exemplary of
their form, outliers, or hybrids. Field meth-
ods like participant observation can also help
us develop more nuanced understandings of
how the members of new organizations
develop structures, routines, and norms, thus
clarifying the process of organizing.
Questions about how new organizations,
especially those using novel forms, borrow or
589
inherit legitimacy from other pre-existing
entities can be answered by observation in the
field and by qualitative analysis (e.g., textual
analysis) of organizational archives; these
methods can shed new light on the content of
organizing. Finally, experimental methods
like vignette studies can allow us to control,
in a rigorous way, alternative explanations for
several observed relationships, such as den-
sity dependence in founding and failure rates.
The second use to make of a greater variety of
empirical methods – direct observation in the
field, laboratory experiments, historical/nar-
rative analysis, textual analysis – is to expand
our set of core research questions by gather-
ing new kinds of data on forces exogenous to
organizational populations (see our first pre-
scription for ecologists).
FINAL WORDS
In closing, we wish to step back and take the
perspective of nearby outsiders: strategy
researchers, economists, cognitive and social
psychologists, and applied mathematicians.
To them, institutionalism and ecology look
remarkably similar. All of these fields are
highly rationalist. When scholars steeped in
these traditions examine organizations, their
focus is generally on understanding and
improving organizational performance. If
institutionalism and ecology arose as an anti-
dote to rationalism within organizational
theory, then they might very well be seen as
allies within the broader context of organiza-
tional studies. Both institutionalists and ecolo-
gists care deeply about theory, methodological
rigour, and building an understanding of
organizations that goes beyond a narrow focus
on optimizing performance. It is often those
groups that are most similar to each other –
French and English Canadians, Flemish and
Walloon Belgians, Protestant and Catholic
Irish – that fight most intensely, even when
more important battles lie elsewhere. The
intellectual world of organizational studies
would benefit from a true peace – not a form
590 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
of mutually assured destruction – between
ecologists and institutionalists.
ACKNOWLEDGEMENTS
We thank Christine Oliver for her insightful
comments and Royston Greenwood for shar-
ing his draft chapter tracing the evolution of
the institutional analysis of organizations.
NOTES
1 For more detailed reviews, see Carroll and
Hannan (2000) and Baum and Shipilov (2006). Note
that our analysis does not cover the study of internal
organizational demography and demographic
change. Both reviews delve into this more micro-
scopic line of work.
2 Organizational theory is not alone in being
divided into material realists and social construction-
ists/idealists. Physics, for example, has long been
fraught by similar disagreements. Recall Einstein’s
famous quip, when he rejected the idea from quan-
tum mechanics that reality was indeterminate and
subjective: ‘God does not play dice with the uni-
verse’. To put it crudely, the ontology of classical
physics is material realism, while that of quantum
mechanics is subjective idealism.
3 These statistics come from searches conducted
on the Web of Science, February 2007.
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Networks and Institutions
Jason Owen-Smith and Walter W. Powell
INTRODUCTION
Research on institutions and networks has
proceeded on largely separate trajectories
over the past few decades. The former is
more associated with work in organizational
and political sociology, and the latter serves
as the wellspring of research in economic
sociology. To be sure, a number of loose link-
ages exist between the subfields. For exam-
ple, many institutional studies presume that
professional or inter-organizational networks
serve as conduits for the diffusion of appro-
priate practices and ideas. Indeed, much
institutional research conflates ‘simple’ dif-
fusion with ‘deep’ institutionalization.
Meanwhile, research on networks often con-
siders how categorical or status variations in
network structures shape social comparison
and stratification processes. But these points
of intellectual cross-fertilization have
remained undertheorized.1
We think there is much to be gained from
a more analytically driven dialogue between
these literatures. We argue that networks and
institutions mutually shape one another. Over
time, this co-evolutionary process creates,
25
sustains, and transforms social worlds.
The cognitive categories, conventions,
rules, expectations, and logics that give insti-
tutions their force also condition the forma-
tion of relationships and thus the network
structures that function as the skeletons of
fields. But networks are more than just the
scaffolds and circulatory systems of organi-
zational fields. They are also the source of
‘horizontal’ distinctions among categories of
individuals, organizations, and actions, as
well as ‘vertical’ status differentials. While
institutions shape structures and condition
their effects, networks generate the cate-
gories and hierarchies that help define insti-
tutions and contribute to their efficacy. Thus,
any effort to understand institutional
processes must take networks into account,
and vice versa.
Our argument draws on core concepts
from institutional and network theory that are
utilized across both lines of work. Despite
their portability, however, they have rarely
been theoretically integrated. Using institu-
tional theory, we highlight the under-
theorized relational aspects of both fields and
logics. Starting in network theory, we
 NETWORKS AND INSTITUTIONS
emphasize the important institutional fea-
tures of embeddedness and social capital.
Our goal is to do more than review existing
points of contact or stimulate joint discus-
sion. We aim to provide a roadmap for future
research that will directly address two critical
animating questions. First, how do institu-
tional practices and forms emerge from
networks? Second, how do institutionalized
categories and conventions shape the
structure and effects of networks?
We begin with a brief excursion through
several canonical works in institutional
analysis, highlighting the implicit, but
nonetheless strong, network underpinnings
of these theoretical arguments. For symme-
try, we select several well-known empirical
studies that directly measure network effects
to account for the transmission of institu-
tional practices and structures. Next we
revisit four foundational ideas – organiza-
tional field, institutional logic, embedded-
ness or the non-contractual basis of contract,
and social capital – which contain both
network and institutional insights that
are, we contend, indissoluble. We then
develop answers to our key questions
about emergence and constraint against this
background.
NETWORKS ARE CARRIERS OF
INSTITUTIONAL EFFECTS
In their classic paper, Meyer and Rowan
(1977) observed that the formal structures of
organizations ‘dramatically reflect the myths
of their institutional environments.’ They
argued that organizations are driven to incor-
porate practices and procedures defined and
buttressed by widely prevalent, rationalized
concepts in the larger society. These prac-
tices were institutionalized through profes-
sional standards and prestige hierarchies, and
reinforced by public opinion. Consequently,
Meyer and Rowan contended that the build-
ing blocks of formal organization ‘litter the
societal landscape.’
597
This canonical article incorporated net-
work ideas in several key ways, although
subsequent work has tended to overlook its
structural aspects. In part, this neglect may
be traced to a contrast that Meyer and Rowan
emphasized between organizations where
survival depended on managing the contin-
gencies of boundary-spanning relations and
others that had to respond to ceremonial
demands which were present in their
environments. This continuum suggested that
managing relational networks involved mat-
ters of coordination and control, while more
institutionalized settings necessitated efforts
at symbolic management. But Meyer and
Rowan also emphasized that all organiza-
tions are embedded in both relational and
institutionalized contexts. They stressed that
the complexity of relational networks gener-
ated ‘explosive organizing potential,’ and this
greatly increased both the spread and number
of rationalized myths. Central to this process
of transmission and standardization were
trade and professional associations and inter-
organizational coalitions.
The generative potential of networks as
transmission channels is readily apparent in
the Meyer and Rowan paper. Similarly,
DiMaggio and Powell (1983) argued that the
great rationalizers of the latter half of the
twentieth century were the professions and
the modern state. The growth and elaboration
of professional networks spanning organi-
zations contributed, they argued, to the rapid
spread of various models of organizing.
Networks were also essential components of
DiMaggio and Powell’s conception of an
organizational field, which emphasized both
connectedness (Lauman, Galaskiewicz, and
Marsden, 1978) and structural equivalence
(White, Boorman, and Breiger, 1976). The
institutional development of an organiza-
tional field hinged on: (1) increased interac-
tion among participants; (2) the development
of well-defined status orders and patterns of
coalition; (3) heightened information shar-
ing; and (4) mutual awareness and respon-
siveness. The twin imprints of the relational
sociologies of Harrison White and Pierre
598 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Bourdieu clearly stamp this account of field
evolution and institutional formation.
From DiMaggio and Powell’s perspective,
status orders shaped patterns of information
exchange, creating a core and periphery
structure that channeled the flow of news and
personnel within organizational fields. The
policies and structures of the most central
organizations in a field were more likely to
be emulated by others. While many subse-
quent researchers picked up on the mimetic
aspects of this phenomenon, the underlying
structural elements received less attention
(see discussion in Mizruchi and Fein, 1999).
Nevertheless, this account of field structura-
tion emphasized how shared meanings and
typifications, as well as stable role structures,
emerged out of repeated interaction.
In one of the most comprehensive empiri-
cal studies of institutional transformation,
Scott and colleagues (2000) analyzed the
profound changes that occurred in health
care delivery in the San Francisco Bay Area
between 1945 and 1990. They demonstrate
the effects differing forms of legitimacy have
on hospital survival rates. In the period fol-
lowing World War II, physicians and their
professional code of conduct dominated
health care standards. Federal financing and
the regulation of health care arose in the late
1960s and greatly expanded in the 1970s and
1980s. That growth was accompanied by
increasingly salient technical forms of legiti-
macy. In recent decades, the health care
industry became more intensely competitive.
For-profit entities entered the field in large
numbers, and managerial legitimacy increas-
ingly shaped evaluative standards. Scott and
colleagues’ rich analysis documented that
earlier professional and regulatory standards
were not extinguished by the new managerial
and market orientations; rather, each succes-
sive era displayed more heterogeneus forms
of legitimacy.
Consequently, as the health care field
evolved, ‘three logics – professional, public,
corporate – were all present, active and
contending with one another’ (Scott et al.,
2000: 316). Federal funding and oversight of
health care eroded professional sovereignty,
opening the door for more market-based cri-
teria. The key point, however, is not that a
new managerial logic replaced physicians or
bureaucrats, but that health care became a
complex, multi-level field in which both the
number and novelty of inter-organizational
connections between hospitals and other
types of health care institutions expanded
dramatically. ‘Managers appear to have been
the beneficiaries, not the agents’ of deinstitu-
tionalized professional power’ (Scott
et al., 2000: 328).
The forces that transformed the health
care field were varied and numerous, ranging
from policy legislation to medical specializa-
tion to the increasing complexity of service
delivery. These broad changes were typically
ushered in by new linkages, formed by
accreditation bodies, shifting organiza-
tional control structures, inter-organizational
alliances and coalitions, as well as new affil-
iations with purchasers, intermediaries, serv-
ice providers, and government. These
network realignments not only brought with
them participants who changed the bound-
aries of the health care field, but the new
entrants were also carriers of novel ideas that
profoundly altered the meaning of health
care. Scott et al. (2000) captured this
change in relationships and meanings aptly
in their discussion of the shift from the
doctor–patient relationship to one of a health
care provider–consumer transaction. This
upsurge in linkages and connections was
critical to accreditation, health care provi-
sion, and fiscal solvency; but these new rela-
tionships also remade the taken-for-granted
understandings of the medical field.
Each of these pillars of sociological insti-
tutionalism argues that social networks trans-
mit ideas and practices in distinctive ways.
Networks also reflect key micro-level inter-
actions that influence institutional dynamics.
To illuminate the recursive nature of institu-
tional and network influences, we turn to
several notable empirical studies that demon-
strate the potent force of social networks.
Though the orientations of the authors differ
 NETWORKS AND INSTITUTIONS
and the objects of inquiry vary, we argue that
these prominent papers carry a common mes-
sage that networks are shaped by social com-
parison processes in which institutionalized
categories are highly influential.
NETWORKS ARE STAMPED BY
INSTITUTIONAL CATEGORIES
Galaskiewicz and Burt (1991) analyze how
corporate officers evaluated nonprofit organ-
izations in the Minneapolis-St. Paul region
and decided whether to make significant
charitable contributions to them. In the Twin
Cities, the networks of high-profile corporate
philanthropists and leaders of the nonprofit
community were closely inter-connected.
The authors tested to see whether the spread
of evaluative standards operated through the
mechanisms of cohesion or through struc-
tural equivalence. The frame of reference in
the former is the dyad, stemming from a his-
tory of past experiences, while the latter is
the larger social system. Dyadic influence
processes operate on a one-to-one basis,
while structural equivalence effects draw on
perceptions of similarity rather than direct
communication. Consequently, structural
equivalence processes are driven by what
officers presume others in comparable posi-
tions are doing.
In a community that is closely knit and in
regular contact, one might expect direct
interaction and cohesion to trump structural
equivalence. Instead, Galaskiewicz and Burt
find the opposite. In the Twin Cities, the
importance of structural equivalence
reflected common norms and standards mag-
nified within a professional community,
demonstrating how the field’s informal strat-
ification orders conditioned individual
acceptance of these norms. As the authors
put it, when an opinion comes to be shared
within ego’s profession, ‘ego is expected to
follow rapidly to avoid the embarrassment of
being the last to espouse a belief that has
become a recognized feature of occupying
599
his or her position in the contributions com-
munity’ (Galaskiewicz and Burt, 1991: 90).
Galaskiewicz and Burt recognize the
strong parallels between their account of the
Twin Cities nonprofits community and
DiMaggio and Powell’s (1983) explanation
for how and why organizations, and the
structure of organizational fields, change
over time. Indeed, they explicitly note that
‘an important component of DiMaggio and
Powell’s argument is the network of contacts
among organizations or their agents’
(Galaskiewicz and Burt, 1991: 88). Within
this philanthropic community, the manner in
which evaluative categories varied across
organizations could be predicted by how
corporate contributions offices were strati-
fied within the status hierarchy of their
profession.
Palmer, Jennings, and Zhou (1993) ana-
lyzed the influence of institutional, political,
and economic factors on the adoption of the
multidivisional form (MDF) by large U.S.
corporations in the 1960s. To assess how
institutional factors influenced the transition
to an MDF, they measured the professional
training and social network connections of
key organizational decision makers, focusing
specifically on elite business school training
of corporate chief executive officers and
interlocks among corporate boards of direc-
tors. They also assessed economic and polit-
ical considerations, including corporate
strategy and performance, as well as the
influence of managerial rivalries, both inside
companies and in external coalitions.
This impressive effort to test rival theoret-
ical arguments found ample support for both
economic and institutional factors, but little
for an explicitly political view. Both corpo-
rate industrial diversity and geographic dis-
persion stimulated the adoption of the
multidivisional structure. Differentiated
companies (i.e., firms involved in multiple
unrelated lines of activity) and those with
facilities spread across the nation encounter
problems that a multidivisional structure pur-
ports to solve. Institutional variables also
proved to be robust. Most notably for our
600 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
purposes, networks were critical factors in
the transition to a multidivisional form.
Corporations in which CEOs had graduate
degrees from elite business schools were
more likely to adopt the MDF than firms with
executives who did not hold elite degrees.
Boards of directors with interlock ties to
firms that had already adopted an MDF
structure also influenced adoption. Not sur-
prisingly, corporate board connections to
non-MDF firms did not (Palmer et al., 1993:
120). Thus, institutional backgrounds and
social connections jointly condition corpo-
rate strategies.
Davis and Greve (1997) analyzed the dif-
fusion of two practices that were adopted by
corporations in the 1980s as a defense
against hostile takeovers. The ‘poison pill’
and the ‘golden parachute’ were embraced by
companies and their managers to raise the
costs of an unwanted takeover bid. Both
of these practices were initially controversial
but came to be adopted by the majority
of U.S. corporations. Yet, despite their
similarities, the ‘pill’ spread quickly and
the ‘parachute’ diffused more slowly.
Interestingly, the channels of social influence
varied too. Pills spread through cohesive ties
among members of corporate boards of
directors, while parachutes were adopted
on the basis of geographic proximity.
Corporations adopted golden parachutes as
other firms in their local metropolitan area
did so.
This intriguing analysis revealed a puzzle:
the same individuals – members of corporate
boards – decided to adopt both practices, but
the tools spread at different speeds through
divergent routes. Davis and Greve ask what
factors accounted for these different patterns
of diffusion. Social networks provide one
compelling answer. Pills spread from one
corporation to another across the nation
because the corporate director network has a
national reach. Boards that shared directors
were the conduits through which this mecha-
nism to deter hostile raiders spread. Golden
parachutes, in contrast, circulated locally.
Their diffusion was rapid in some areas, but
in other regions the practice never took hold.
In the status-bound corporate world of
New York City, for example, protecting the
CEO was seen as a duty of boards, but in
the more rough-and-tumble entrepreneurial
world of Silicon Valley, parachutes were
eschewed. The mechanism at work here was
social comparison among local elites, who
looked to their regional reference groups
for a sign of whether their CEO should be
protected against unexpected job loss. This
‘parochial’ social comparison process
resulted in a slower rate of diffusion than the
more national and cosmopolitan transmis-
sion of pills through director networks.
Davis and Greve point out that these local
and national network channels were also
characterized by different normative stan-
dards. The poison pill was couched in a lan-
guage of fending off unscrupulous raiders.
This defense was perceived as appropriate
and legitimate by board members; and thus
championed by them in different corporate
settings. Contact with directors in similar
industry sectors and in corporations of com-
parable status became the venues for diffu-
sion of a practice that came to be regarded as
accepted and necessary.
Parachutes were much more difficult to
legitimate. They were perceived by some to
reflect naked managerial self-interest, while
others saw them as payoffs for weak man-
agers. Questions about the appropriateness of
parachutes were answered locally, by look-
ing to the behavior of central individuals and
companies in the regional economy. In short,
the relevant networks for diffusion and the
pace at which they communicated specific
practices were shaped by the broader institu-
tional context in which they were situated.
Davis and Greve’s analysis affords keen
insight into how network configurations
are conditioned by institutional forces.
Understanding why the same boards take sig-
nals about adopting pills from distant but
connected rivals, while turning to local com-
munity members for signals about the legiti-
macy of parachutes, requires not only
attention to networks, but to the meaning of
 NETWORKS AND INSTITUTIONS
practices, to categorical distinctions and to
status hierarchies.
We find numerous shared analytical under-
pinnings in these different, notable accounts
of institutional influences and network
effects. Hany scholars identify networks as
the channels through which institutional
effects flow, and see networks of like-minded
individuals as central reference groups that
promote widely emulated practices. The pres-
ence of these common elements in a handful
of important empirical studies lends credence
to our claim that networks and institutions
mutually influence one another. To pursue
this argument, we move from empirical stud-
ies to conceptual claims, and offer a brief exe-
gesis of four core ideas that are widely used
in both network and institutional analyses.
We demonstrate that core concepts in institu-
tional and network theory are analytically
richer and more useful when they take each
other into account.
FOUNDATIONAL CONCEPTS
Organizational fields
Fields are simultaneously master concepts
and fundamental empirical sites for institu-
tional analysis. Much recent (and some not
so recent) work has focused on genesis and
change in such diverse fields as politics, the
arts, law, gastronomy, and the chemical
industry (Clemens, 1997; DiMaggio, 1991;
Dezalay and Garth, 1996; Ferguson, 1998;
Hoffman, 2001; Rao, Monin, and Durand,
2003). These rich narrative efforts, as well as
more abstract treatments, rely heavily on
relational language to describe the contours
and characteristics of fields. Perhaps more
importantly, organizational action within
fields is understood largely in terms of affili-
ation, competition, and shared membership,
all features that emphasize how social rela-
tions shape institutions (Fourcade, 2007).
Consider two related definitions of
fields. In one view, an organizational field is
601
a community of organizations that engage in
common activities and are subject to similar
reputational and regulatory pressures
(DiMaggio and Powell, 1983; Scott et al.,
2000). Through a more politically filtered
lens, a field is seen as a space of positions
whose characteristics are jointly defined by
the configuration of their inter-relationships
and by the struggles of actors who seek to
claim them (Bourdieu and Wacquant, 1992).
These two definitions bracket contemporary
institutional parlance, where ‘field’ carries
three distinct, but only partially decompos-
able connotations. We highlight each sense
of the term, and then argue that their indissol-
ubility results from the relational threads that
cross-cut them. Networks both structure and
integrate fields.
The fields of institutional theory are recog-
nizable arenas of social action, as such they
are fields of endeavor. A more dynamic view
suggests differentiated fields of play where
more or less attractive positions convey
opportunity, and constrict the possibilities of
various social groups. Finally, fields are
molded into their characteristic shapes by
rules, conventions and expectations that
define appropriate activities and legitimate
positions. Thus, this view emphasizes fields
of force that regulate social action.
Relationships are moves in games and fun-
damental components of the fields on which
they are played. As such, concrete network
structures map past struggles, and shape pos-
sibilities for the future by differentially chan-
neling resources to contestants. Networks
also push and pull players into finite sets of
positions. Thus, the positions and affiliations
participants claim are only partially under
their control. The presence and absence
of ties render a confusing struggle clear
to observers and participants alike
by allowing them to classify and order both
the players and their moves into categories
(forms, identities, strategies) and hierarchies
(status orders). A fundamental insight of
network theory, often neglected in institu-
tional analyses, is that relationships are both
pipes that channel resource flows and as
602 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
prisms that help render action sensible
(Podolny, 2001).
Networks are essential to fields in at least
two senses: they are both a circulatory
system and a mechanism for sensemaking.
Fields are shaped by networks, which condi-
tion the formation of relationships and help
establish their consequences. But it is only
against the backdrops of particular fields that
rationalities and strategies of action are sen-
sible. The relational aspects of fields are the
threads that weave together the term’s dis-
parate meanings.
Institutional logics
Logics constitute the rules and conventions
of a particular organizational field. In broad
terms, an institutional logic is the constella-
tion of beliefs and associated practices (the
schemas and scripts) that a field’s partici-
pants hold in common. These packages of
beliefs and practices are organizing princi-
ples and recipes for action. They have
instrumental, normative, and cognitive impli-
cations (Friedland and Alford, 1991;
Whitley, 1992; Thornton, 2004). Logics pro-
vide rationales for action. They are most
influential when they are consistent and
easily taken-for-granted. But when multiple
competing logics are in play in the same set-
ting, they can trigger conflict and/or generate
new accounts of activity.
Three different approaches to the idea of
logics rely on relational underpinnings, but
their structural features are rarely elaborated.
Consider first the idea, drawn from work in
the Carnegie School tradition of organization
theory, that organizational action is routine-
based, rule-governed, and triggered by con-
ventions that match concrete situations and
actions to the needs of particular positions
(Cohen, March, and Olsen, 1972; March and
Olsen, 1984). These logics of appropriate-
ness do more than simply set the grounds for
concrete action in particular situations. When
strung together across roles, they represent
the authority structure of an organization by
‘defining the relationships among roles in
terms of what the incumbent of one role
owes to the incumbents of other roles’
(March and Olsen, 1984: 23). In contrast to
classic Weberian notions of authority, it is the
linkages among conventional recipes for
action that are central, defining characteris-
tics of organizations. When spread across
the categorical distinctions provided by orga-
nizational roles, logics comprise formal
structures.
Clemens (1993, 1997) extends the idea
of logics by recognizing that the social world
is rife with alternative models for organizing
any particular endeavor. In her view,
organizational repertoires are templates that
structure concrete relationships within organ-
izations and convey scripts for behavior that
link forms of organization to cultural
expectations (Clemens 1993: 758). In this
sense, logics offer a mechanism by which
institutions direct the formation and
mobilization of networks, while providing a
means for expectations and regulations to
exert force upon the participants in a
field. The analytic link she makes between
institutional logic and organizational form
is an important one that deserves further
explication.
Institutional logics, then, are inextricably
tied to concrete structures that define the
authority relationships that characterize orga-
nizational forms. Logics do more, however,
than forge collections of roles into formal
organization. Friedland and Alford (1991)
offered a now widely held view of logics as
central, distinguishing features of fields.
In their view, the content of a field’s
dominant logic renders networks much more
than mere affiliations. Without institutional
logics, ‘it will be impossible to explain what
kinds of social relationships have what kind
of effect on the behavior of organizations and
individuals’ (Friedland and Alford, 1991: 225).
Logics make networks meaningful features
of social and economic worlds precisely by
disciplining (though not determining) the
formation and implications of relationships.
The presence or absence of connections and
 NETWORKS AND INSTITUTIONS
the resources that flow through them, as well
as the meanings that participants and
observers attribute to relationships, depend
upon prevailing logics. The same relation-
ship or affiliation may exist under the aus-
pices of multiple institutional logics, which
provides leverage to elaborate the ways in
which relationships carry the social into
instrumental exchanges.
Embeddedness: the non-contractual
basis of contract
Classic research in organizational studies
(Dalton, 1959; Gouldner, 1954) and a foun-
dational work in economic sociology
(Macaulay, 1963) demonstrated that even
highly purposive economic exchanges are
enmeshed in and freighted with social expec-
tations. Organizational and economic actions
result from a complex lamination of motiva-
tions and meanings that participants draw
from the various fields in which they partici-
pate. Macaulay’s (1963) key finding that
businessmen often disregard the legal rights
and responsibilities inherent in contract in
favor of more social means of dealmaking
and dispute resolution underscored how
social relations cemented economic transac-
tions. His study offered a starting point for
Granovetter (1985) who, drawing on
Polanyi’s (1957) insight that market relation-
ships are embedded in both economic (con-
tract) and non-economic (friendship, familial)
institutions, illuminated how concrete social
relationships shape economic activity.
Granovetter’s (1985: 500) argument that
social relationships are fundamental to eco-
nomic processes has been highly influential.
Nevertheless, we concur, to a degree, with
critics of the embeddedness perspective
(Krippner, 2001; Lie, 1997) who argue that
a purely relational view of market activity
loses some of the evocative features of
Polanyi’s original, more institutional defini-
tion. Social ties are fundamental to eco-
nomic relations, certainly. What we find
more interesting is the insight that economic
relationships (as well as any other collective
social activity) can be understood in terms of
603
multiple institutional arrangements and
logics, only some of which are instrumental.
Relationships matter precisely because their
meanings are variable and depend on the ori-
entations of participants to the various logics
and contexts that render them sensible.
Return, for a moment, to Macaulay’s (1963:
61) discussion of contract and consider the
oft-cited example of a businessman who
notes: ‘You don’t read legalistic contract
clauses to each other if you ever want to do
business again. One doesn’t run to the lawyers
if he wants to stay in business because one
must behave decently.’ There is clearly a story
about trust, forbearance, and the shadow of the
future implicit in these statements. Much less
explored, however, is the idea that ‘behaving
decently’ is defined against a particular social
and institutional backdrop.
The idea that lawyers should be excluded is
not because they are personal strangers but
because they view the same relationship
through a different institutional lens, which
helps explain why they find the business-
man’s approach ‘startling’. As Macaulay
noted, where businessmen see orders that can
legitimately be cancelled, lawyers see the
same exchanges as contracts whose violation
carries strongly negative consequences.
Economic exchange has a non-contractual
basis, but that bedrock is both relational and
categorical. The meaning of a relationship
and the actions appropriate to it depend
jointly on the parties to the tie and the broader
institutional and professional milieus to
which they belong. Put differently, relation-
ships are multiply embedded and the social
entanglements that make economic exchange
possible are the joint outcome of both net-
works and institutions. We make a similar
claim about our final concept, social capital,
which more closely situates individual activi-
ties in both fields and networks.
Social capital
Like ‘embeddedness,’ the voluminous
and disparate uses of ‘social capital’ have
604 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
rendered the concept slippery. At a basic
level, capital is a resource that can grow with
investment and use. Social capital, then, is
capital derived from relationships external to
the individual (Lin, 2001). In other words,
social networks convey an array of resources
to individuals at differential rates. Viewed
instrumentally, that capital can be invested
with some expectation of returns. The
networks that convey social capital can be
either concrete, measurable relationships or
more diffuse affiliations based on group
membership.
The latter sense of membership owes
much to Durkheim and treats the collective
effervescence and shared identification of
social groups as both a public and a private
good that can be harvested for personal and
collective benefit (Putnam, 2000). In
Alejandro Portes’ terms (1998: 52), ‘involve-
ment and participation in groups can have
positive consequences for the individual and
the community.’ Other scholars take a nar-
rower view, focusing more explicitly on con-
crete relationships of exchange. Burt (2005:
4), for instance, notes ‘One’s position in
the structure of ... exchanges can be an asset
in its own right. That asset is social capital,
in essence, a conception of location effects in
differentiated markets.’ In this formulation,
social capital derives from the structure of
the collective, but the returns are to the indi-
vidual and are based on differential positions
within networks rather than on the interplay
of affiliation and identification emphasized
in more categorical, membership-based
treatments.
Two often-cited general definitions of
social capital combine both these aspects in a
fashion that is instructive for our effort. Both
situate social capital within a particular
context, while treating it as an imperfectly
fungible resource. Coleman (1990: S98) rec-
ognizes that social capital is plural: ‘Social
capital is defined by its functions. It is not a
single entity, but a variety of different enti-
ties, with two elements in common: they
all consist of some aspect of social struc-
tures, and they facilitate certain actions of
actors ... within the structure.’ Note three fea-
tures of this definition. First, there are multi-
ple ‘social capitals.’ Second, social capital
does not equally facilitate all activities.
Third, the activities for which this capital is
an efficacious resource are located within
the structure that defined it. Put more suc-
cinctly, social capital is contextual: it derives
from and only pays dividends in certain
situations.
Pierre Bourdieu offers a subtly different
definition of the concept. He emphasizes a
broader notion of social structure and a more
explicit emphasis on resources, distinguish-
ing social capital from both cultural and
human forms of capital: ‘The aggregate of
the actual or potential resources which are
linked to possession of a durable network
of more or less institutionalized relationships
of mutual acquaintance or recognition’
(Bourdieu, 1985: 248). This definition is also
a complicated one, but note that it makes
social capital an outcome of both direct ties
and recognizable membership. Perhaps more
importantly, Bourdieu’s emphasis on institu-
tionalized relationships returns us to the
consideration of fields, a complementary
concept in his theory of practical action.
Here, capital (of whatever form) is derived
from the arrangements that characterize par-
ticular fields, and it is within those fields that
different varieties of capital can be mobilized
to serve disparate ends.
We argue that this close look at key con-
cepts from institutional theory and network
theory demonstrates that the approaches are
indissoluble. Fields are fairly barren without
the interpretive lenses and resource channels
created by networks. Logics render networks
and organizational structures sensible in par-
ticular fields, but many, if not most, activities
are amenable to multiple logics. Thus, the
ability of logics to shape social action
depends intimately on the structures in which
activities take place and the partners with
whom they are undertaken. Expanding the
reach of all four concepts to more fruitfully
capture such relationships will be particu-
larly important to the growing number of
 NETWORKS AND INSTITUTIONS
studies that examine the genesis and dynam-
ics of institutions and networks. In the fol-
lowing section, we abstract from our
foregoing discussion to sketch an analytic
framework that takes up this challenge.
CONTEXT OR CO-CONSTITUTION?
We have documented a set of analytic con-
nections between networks and institutions.
Canonical works in neo-institutional theory
rely explicitly on network imagery and
mechanisms, while exemplary empirical
pieces demonstrate that networks are central
to explanations of institutional phenomena.
Similarly, four master concepts – field, logic,
embeddedness, and social capital – mix both
relational and categorical claims. We believe
these interdependencies can be understood in
two ways. The first, less radical view, treats
networks and institutions as mutually
reinforcing, contextual features of social
systems. The second line of argument exam-
ines how networks and institutions co-consti-
tute one another. Put differently, the first
view sees institutions as the landscape and
networks as the social relations on that field.
The second view argues that fields influence
which relations are possible, and how
these relations are forged can alter the
landscape in profound ways. We hold the
second view.
Many institutionalists have recognized that
networks are important contexts for under-
standing institutional process (Jepperson,
1991; Davis, Diekmann, and Tinsley, 1994;
Dobbin and Dowd, 2000). Contextual effects
are key, but more important, we believe, is the
idea that networks and institutions are co-
constitutive. In other words, networks shape
institutions but institutions sculpt networks
and direct their growth. Genesis and change,
not just context, are at stake in the merger of
structural and cultural approaches to complex
social systems.
Our argument rests on the idea that
categorical distinctions are at the heart of
605
institutions, and the concrete relation-
ships that are the basis of networks have a
dual character. Like other well-known duali-
ties – between persons and groups (Brieger,
1974), meanings and structures (Mohr,
1998), organizations and environments
(Stinchcombe, 1965) – we take meaningful
social categories to be defined in large part
by relationships’ participants from within
and across them (White et al., 1976). At the
same time, the likelihood and implications of
particular relationships stem from the
categories that collaborators occupy and
span. As a result, categories and relationships
jointly bound and determine action in social
systems.
Understanding how networks and institu-
tions co-evolve to shape social and economic
arrangements requires us to attend to the
myriad ways that relationships and cate-
gories influence each other. We argue that
one force behind that shaping is organiza-
tions and individuals who strive to navigate
settings where multiple institutional logics
either co-exist or collide.2 If logics offer tem-
plates for action and organizing while ren-
dering existing and potential relationships
meaningful, then settings where multiple
logics overlap will be particularly fertile
ground for institutional entrepreneurship.
Some of those in structural locations that
engage multiple logics – as in art and com-
merce, patient care and administrative
efficiency, or altruistic medical donations
and income generation – can use their
circumstances to forge new opportunities or
craft multivocal identities. In settings
where numerous logics reflect conflicting or
incompatible demands, ambiguous identities
and multiple networks offer room to maneu-
ver. Still, the tensions that are generated
by ambiguity, multiplicity, and contradiction
can be daunting to individuals and
organizations.
Practical action draws on both relation-
ships and categories, and, in so doing, links
networks and institutions. Such efforts are
most visible in settings characterized by con-
flicting logics, multiple audiences, and
606 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
ambiguous categories. Participants in spe-
cific fields draw on categories and associated
logics to make sense of their worlds and
direct their relationships and affiliations. At
the same time, relationships and affiliations
offer participants disparate types and
amounts of capital, depending on their insti-
tutional context. Continuity and change in
categorization systems and network struc-
tures alike depend on discernable patterns in
the formation of ties and affiliations.
How, then, do we explore the generative
relationship between networks and institu-
tions? A thorough-going elaboration of a
‘network-institutional’ research program is
beyond the scope of this chapter. We opt
instead to reconsider some of our own work
on the evolution of the human therapeutic
and diagnostic biotechnology industry and
on the institutional changes that surround the
commercialization of academic research. In
the former setting, multiple logics of discov-
ery associated with different types of organi-
zational partners encourage biotechnology
firms to create and maintain diverse network
ties in order to innovate and develop novel
products. These ties span multiple types of
organizations to form a field where relation-
ships and outcomes alike are stamped by
the categorical features of partners. In the
latter setting, logics associated with the
commercial use of science are imported into
the established field of public science, spark-
ing both structural and institutional transfor-
mations. We address a set of research
questions that emerge from treating skilled,
but constrained, performances as a mecha-
nism linking relationships and categories.
The key questions we consider are:
(1) How do the meaning and consequences of
relationships depend on the character of the
participants?
(2) How do the effects of macro-structures depend
on the types of participants that comprise them?
(3) How do locally situated individuals pull down
global categories and draw on external relation-
ships in their daily activities?
(4) How does situated action escape its local context to
alter global categories and external relationships?
These questions do not exhaust the con-
nections between networks and institutions.
Nevertheless, we believe that initial answers
to these queries will aid in developing a
theory of social and economic life that treats
networks and institutions as flip sides of the
same analytic coin.
We begin by revisiting our work on the
evolution of inter-organizational collabora-
tion in human therapeutic and diagnostic
biotechnology. The commercial field of the
life sciences provides us with fertile ground
to answer our first two questions. We first
discuss how the same collaborative activi-
ties, for instance joint R&D efforts, have
very different implications for biotech firms
depending on the organizational form of
partners. Here categorically different forms
of organization bring different logics to the
same activities. As a result, the likelihood
and effects of any particular tie depends on
institutional features of the partner.
R&D undertaken with pharmaceutical
firms, for instance, differs dramatically
from scientifically comparable research con-
ducted with academic, university-based
collaborators because pharmaceuticals and
universities operate in different selection
environments under different institutional
logics. Moreover, as the field developed
biotech firms and partner organizations
become relational generalists. In addition to
learning to manage multiple types of activi-
ties across stages of product development,
biotech firms developed the capacities neces-
sary to conducting the same kinds of endeav-
ors with different types of partners. Their
efforts to develop and maintain network port-
folios that include diverse activities and part-
ners accounts for the characteristic structure
of the industry-wide network.
We next turn to analyses of innovation in
two densely populated biotechnology
regions, Boston and the San Francisco Bay
area, to address our second question. These
two regional communities are highly produc-
tive, but one (Boston) is anchored in a net-
work that grew from public sector origins.
The other community (SF Bay) is centered
 NETWORKS AND INSTITUTIONS
on a network that emerged from starting
points in venture capital (VC) initiatives. The
different institutional anchors in these two
regional networks result in divergent
approaches to innovation. Both clusters are
highly successful and network structures are
fundamental in both places, but the types of
success and the ways in which networks
matter vary with the organizational form and
associated logics of key participants.
We dramatically shift levels of analysis
and go ‘microscopic’ to examine our next
two questions. We first consider the ways in
which broad logics (of appropriate skepti-
cism), salient categories (such as academic
discipline) and concrete relationships (of col-
laboration and mentorship) are pulled down
into the daily life of a scientific laboratory.
The institutional and relational features of
academic science shape laboratory life, but
they do so imperfectly because they also
offer researchers avenues for resistance.
Finally, we turn to an analysis of decision
making in a high-profile technology licens-
ing office to consider how local action can
escape its immediate context to reshape
broader categories and relationships. In
this instance, situated efforts to resolve con-
tradictory logics at the boundary between
academe and the market drive licensing
officers to create complicated deals that can
entangle participants from different indus-
trial and technological categories, thus shift-
ing the character of the field.
THE RECURSIVE NATURE OF
NETWORKS AND INSTITUTIONS
In their study of the commercialization of the
life sciences, Powell and colleagues (2005)
offer a co-evolutionary analysis of how fields
and networks influence one another. Their
starting point is the view that fields emerge
when social, technical, or economic changes
exert pressures on existing relations, and
reconfigure models of action and social
structures. In this respect, they follow
607
Bourdieu and Wacquant (1992) in viewing a
field as a center of debate in which compet-
ing interests negotiate over resources and the
interpretation of key rules and conventions.
Their study focuses on the interaction of
multiple overlapping networks through time
by examining how the formation, dissolu-
tion, and rewiring of network ties from 1988
to 1999 shaped the opportunity structure of
the biomedical field. By linking an evolving
network topology and field evolution, Powell
et al. demonstrate that social change is not
an invariant process that affects all partici-
pants equally. Rather, field-level transfor-
mations are multi-dimensional phenomena.
Organizations feel the reverberations of
change in different ways, depending on their
institutional status and location in the overall
network. But the status orders and structures
of the field change over time.
The analytical aim of the 2005 paper was
to illuminate how patterns of network inter-
action emerged, took root, and transformed
the field, with disparate ramifications for all
of the varied participants. The empirical set-
ting was the field of biotechnology, which
developed out of university laboratories in
the 1970s, saw the founding of dozens of sci-
ence-based companies in the 1980s, and
matured in the 1990s with the release of
dozens of novel medicines. The field is
notable for both scientific and commercial
advances and for a diverse cast of organiza-
tions ranging from universities, public
research organizations, venture capital firms,
dedicated biotech firms, and giant multina-
tional pharmaceutical corporations. Because
the sources of scientific leadership were
widely dispersed and developed rapidly, and
the relevant skills and resources needed to
produce new medicines were broadly distri-
buted, the participants in the biomedical field
have found inter-organizational collaboration
essential (Powell, Koput, and Smith-Doerr,
1996). By analyzing the evolving structure of
inter-organizational networks, we demon-
strated how the larger field and its conven-
tions changed both the meaning of ties and
the practice of collaboration.
608 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
In the early years of the industry, from
1975 to the late 1980s, most biotech firms
were small companies that relied heavily on
external support. No biotech firm had the
necessary skills or resources to bring a new
medicine to market in the early days, thus
they became involved in an elaborate lattice-
like network of relationships with universi-
ties, hospitals, and large multinational firms.
The large corporations, despite well-
established internal capabilities, lacked
access to the cutting edge of university sci-
ence. Deficient in a knowledge base in the
new field of molecular biology, large firms
were drawn to the biotech start-ups that had
more capability at basic and translational sci-
ence. This diverse distribution of technologi-
cal and organizational resources was a key
factor driving early collaborative arrange-
ments in the industry. A number of institu-
tional factors undergirded this collaborative
division of labor.
The breakneck pace of technical advance
has rendered it difficult for any single organ-
ization to remain scientifically abreast on
multiple fronts, hence linkages to universities
at the forefront of basic science have been
necessary. The availability of funding also
increased rapidly, as biomedicine became a
major force in modern global society. The
budget of the U.S. National Institutes of
Health, a key funder of basic research, nearly
doubled in the 1990s during the Clinton
years. Venture capital financing flowed into
biotech somewhat irregularly in the 1990s,
but over the course of the decade grew
markedly. Biotech financing by venture cap-
ital has always been somewhat counter-cycli-
cal. When there was great enthusiasm for the
internet and telecommunications start-ups,
interest in biotech waned. But when the
bloom fell off the internet rose, financing for
biomedical ventures went on the upswing.
Two factors stood out in shaping the early
structure of the field and the nature of its net-
works. One is that the different members of
the field had varying abilities and competen-
cies. Some of the participants were highly
specialized, while others had a hand in
multiple activities. For example, universities
and public research organizations specialized
in basic science and in early stages of drug
development. Venture capital firms special-
ized in financing. Biotechnology companies,
and especially large multinationals, tended to
have a hand in many more activities. More
recently, public research organizations such
as universities have greatly broadened their
range of endeavors in the biomedical field.
The most dramatic finding of this research
was that, over time, all participants in the
field had to learn to master a wider array of
relationships and move from specialist to
generalist roles. That move makes the need
to navigate multiple potentially competing
logics a key feature of the field.
Second, as the field gained coherence and
the pattern of reliance on networks solidified,
various institutions emerged to facilitate and
monitor inter-organizational collaboration.
Offices were established on university cam-
puses to promote technology transfer, law
firms developed expertise in intellectual
property issues, and various angel investors
and venture capital firms provided financing,
along with management oversight and refer-
rals to a host of related businesses. As these
relations thickened and a relational contract-
ing infrastructure grew, the reputation of a
participant came to loom large in shaping
identities (Powell, 1996).
There are two aspects of this analysis that
are highly relevant to our current discussion
of network and field evolution. One, notable
changes in the nature of the actions pursued
by the field’s participants accompanied shifts
in the field’s characteristic practices, logics,
and norms. Two, both the cast of participants
and the rules of the game changed as new
logics of affiliation emerged and spread. We
briefly summarize these two co-evolving
trends, and refer the reader to the more exten-
sive discussion in the 2005 paper.
In the late 1980s, the most active partici-
pants in the emerging biotechnology industry
were the dedicated biotech firms, pharma-
ceutical corporations, and key government
agencies such as the National Institutes
 NETWORKS AND INSTITUTIONS
of Health. In these early years, biotech firms
lacked the capability to bring novel medi-
cines to market, while large firms trailed in
understanding new developments in molecu-
lar biology (Gambardella, 1995; Powell and
Brantley, 1992; Henderson, Orsenigo, and
Pisano, 1999). Venture capital activity in
biotech was limited, and most small compa-
nies supported their research and develop-
ment activities by selling their lead products
to large corporations, which subsequently
marketed the medicine and pocketed the
lion’s share of the revenues (Powell and
Brantley, 1996).
A handful of emerging dedicated biotech
firms with considerable intellectual property
and strong translational research ability were
highly sought after as collaborators. This first
wave of biotechs founded in the 1970s and
early 1980s included Genentech, Centocor,
Amgen, Genzyme, Biogen and Chiron, and
the most active large corporate partners were
firms such as Eastman Kodak, Johnson and
Johnson, and Hoffman La Roche. While the
commercial logic of young firms selling their
lead products to major corporations domi-
nated the landscape of the 1980s, a new set of
relationships was quietly emerging.
The National Institutes of Health began
forging R&D relationships with new entrants
to the industry, and linking university scien-
tists and start-up firms. As the science under-
girding biotechnology expanded by leaps and
bounds, the intellectual property associated
with the science became more codified and
legally secure. This, in turn, attracted greater
interest from venture capital. By the early
1990s, biotech firms not only had highly
prestigious science, evidenced by publica-
tions in top-tier journals, but they also had
secure legal rights to their intellectual prop-
erty in the form of patents. The networks of
affiliation began to change, in some respects
quite dramatically. By the mid 1990s,
the most active participants in the field
continued to be dedicated biotech firms, but
the large pharmaceutical companies were
pushed to the sidelines by the entrance
of venture capital firms and universities.
609
Moreover, the primary locus of activity
shifted from commercialization to research
and development and finance.
The industry expanded geographically as
well, moving from its early origins in the Bay
Area and Boston to San Diego and a handful
of other key regions in the United States and
Europe (Owen-Smith, Riccaboni, Pammolli,
and Powell 2002). Growth in the number of
new firms, new partnerships, and new ideas
was greatly enhanced by an increase in finan-
cial linkages and government research fund-
ing. The combination of the growth of private
equity markets and national funding for
R&D replaced the former reliance on large
corporations for support.
The older relationship with giant multina-
tionals for commercialization activity was a
very restrictive one. A small handful of firms
had the ability to take a drug to late-stage
development and a small set of dominant
multinationals could manufacture and dis-
tribute the drug worldwide. This commer-
cialization arrangement was a downstream
activity, involving the sale of a new medical
product. One might consider it the last dance
in the product life cycle. In contrast, finance
is an upstream activity, which fueled research
and development, licensing, and subsequent
commercialization. Consequently, it enrolled
many more participants into the industry net-
work. With the addition of more participants,
a wider array of organizational forms joined
the field. Diversely anchored, multi-con-
nected networks are much less likely to
unravel than are networks that are reliant on
a few forms of organization.
Most notably, multiple logics were now at
play. Pharmaceuticals began to recognize
that they had to learn skills other than devel-
opment and commercialization in order to
compete with university researchers and ven-
ture capitalists for access to cutting edge
ideas. The network structure of the field con-
tinued to expand throughout the 1990s, as
both the number of entrants and the number
of ties linking incumbents and new entrants
expanded greatly. Indeed, in 1998 more
than 1100 new ties were forged. All of the
610 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
participants – from federal funding agencies
to universities to biotech firms to pharmaceu-
ticals – had begun to engage in a wide array
of activities and were no longer specialists.
We refer to the ability of participants to par-
ticipate effectively in multiple kinds of ties
with diverse parties as multivocality, a domi-
nant pattern that emerged whereby highly
central participants were involved in a
diverse array of collaborations with an exten-
sive set of partners of different types (Padgett
and Ansell, 1993).
As the cast of participants grew, and as
diversity in both organizational form and
activity became more important, new logics
of affiliation took hold. In the early years,
there was a powerful influence of accumula-
tive advantage. Those entrants who had the
most visibility attracted the most attention
and the greatest sponsorship. In short, the
rich got richer in the Mertonian sense
(Merton, 1968). As the field grew, homophily
became more important, particularly in terms
of geographic location as firms located near
one another connected. Particular regions of
the country became known for their biotech
clusters. Through time, a logic of appropri-
ateness developed, in which assumptions
about what a biotechnology firm looked like
became widely accepted. A new canonical
firm excelled in translational science and
typically had ties to a research university, a
venture capital firm or two, and a large cor-
porate partner. A highly successful firm
would add affiliations with a noted research
hospital and perhaps a federal agency, such
as one of the branches of the National
Institutes of Health. But note that each of
these affiliations was for a specific type
of relationship, the venture capital tie for
finance, the university tie for research, the
link to the hospital for clinical trials, and the
partnership with a large corporation for com-
mercialization.
As the field evolved, the diversity of
participants began to reshape the range
of activities that the participants undertook.
As key participants became relational gener-
alists, the logic of affiliation that we dub
combinatorial or multivocal took root and
began to diffuse to the field’s periphery.
Neither money, market power, nor the
sheer force of novel ideas dominated the
field. Rather organizations with diverse port-
folios of well-connected collaborators
became the most cohesive, central partici-
pants in the field and played the largest
role in shaping its evolution. The
density of the expanding network and the
open scientific trajectory combined to
enhance the importance of the various partic-
ipants’ reputations. The pattern of cross-cut-
ting collaboration meant partners on one
project were often rivals on another. As a
result, networks were frequently rewired.
Thus participants had to learn how to exit
relationships gracefully, so as not to damage
their future collaborative prospects. The co-
evolution of networks and categories in the
field created a social structure in which exter-
nal sources of knowledge and resources
became widely differentiated and a prefer-
ence for diversity and affiliation with multi-
ply connected partners had powerful
mobilizing consequences.
INSTITUTIONAL EMBEDDEDNESS
SHAPES CATEGORIES AND
PRODUCTS
In more recent work we have moved from
analyzing the evolution of the macro-network
to more fine-grained study of the two most
active biotechnology clusters, the San
Francisco Bay Area and the Cambridge/
Boston region. The attributes and successes
of these clusters are widely touted, and their
efforts have been broadly emulated world-
wide (Powell, Owen-Smith, and Colyvas,
2007). But interestingly, despite their similar-
ities in scale and reputation, each region
emerged through distinctive patterns of col-
laboration that appear to influence their char-
acteristic processes of discovery and types of
innovation. We explored the relationship
between the forms of affiliation and the types
 NETWORKS AND INSTITUTIONS
of innovative activity pursued in these regions
(Owen-Smith and Powell, 2006).
In the conceptual terms used earlier, our
analyses of innovation in Boston and Bay
Area biotechnology draw on two core ideas.
First, our work demonstrates that the organi-
zational form of the dominant players in a
network shapes the character of social capital
in a community. Where universities domi-
nate, a logic of discovery that favors open-
ness and information diffusion prevails and
membership alone suffices to increase rates
of innovation. In contrast, when for-profit
organizations are key players in the network
and more ‘closed,’ proprietary logics are at
the fore, a central network position is essen-
tial (Owen-Smith and Powell, 2004). In addi-
tion to shifting the ways that organizations
extract benefits from their networks, the dif-
ferent logics associated with partners of dis-
parate form shape strategies for innovation,
the kinds of connections firms forge, and the
markets they seek to serve.
Recall our description of the different types
of organizations — including VC firms, gov-
ernment agencies, large multinationals, public
research organizations, and dedicated biotech-
nology firms – that comprise this field. These
diverse organizational forms were linked by
multiple types of affiliations: R&D connec-
tions for shared research and development,
finance ties reflecting investment, licensing
relations that transfer the rights to intellectual
property across organizations, and commer-
cialization partnerships that include product
development, clinical trials, manufacturing,
and sales and marketing.
We find two notable differences between
the Bay Area and Boston regional networks.
The Bay Area is larger organizationally and
geographically, with many more biotech
firms, several major universities, including
Stanford and the Universities of California
(UC) at Berkeley and at San Francisco
(UCSF), and numerous venture capital firms.
The Boston network, while denser and some-
what smaller, has many more public research
organizations, including MIT, Harvard
University, Massachusetts General Hospital,
611
Dana Farber Cancer Center, and Brigham
and Women’s Hospital. The Boston area had
many fewer venture capital firms in the
1970s and 1980s, and VCs arrive in the
Boston region much later (Powell, Koput,
Bowie, and Smith-Doerr, 2002). Neither
region housed a large multinational pharma-
ceutical corporation during the period
stretching from 1970s through the 1990s.
Both clusters have structurally cohesive net-
works, but they differ in their mix of organi-
zational types.
We have shown that the Boston network
grew from early origins in the public sector,
and that public science formed the foundation
or anchor for subsequent commercial applica-
tion (Owen-Smith and Powell, 2004; Porter,
Whittington, and Powell, 2005). Because the
Boston biotechnology community was linked
by shared connections to public research
organizations early in its evolution, this clus-
ter manifested a more open technological tra-
jectory than clusters more heavily reliant on
industrial R&D. By contrast, the Bay Area
was much influenced by the prospecting and
matchmaking efforts of venture capitalists,
the multidisciplinary science of the UCSF
medical school, and efforts novel technology
transfer at Stanford (Colyvas, 2007). The San
Francisco Bay Area evolved out of this more
commercial and entrepreneurial orientation.
Interestingly, both Boston and the San
Francisco Bay Area developed from depend-
ence upon a non-biotech organizational
form, and these diverse forms, whether they
are public science organizations or highly
engaged entrepreneurial financiers, helped
catalyze the development of the respective
clusters.
Do these different relational components
and logics influence the nature of research
and the kinds of medical products that
emerged from the companies in these two
regions? We explored this question in two
ways, by examining the nature of patenting
among the participants in the two regions and
through a paired comparison of two compa-
rable treatments for multiple sclerosis. In a
2006 study, we found a significant difference
612 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
in the patenting activity of biotech firms in
Boston and the Bay Area, with Bay Area
firms producing roughly 3,800 U.S. utility
patents over the period 1988–1999, while
Boston area firms generated 1,376. Bay Area
firms are much more prolific patentors.
The highly skewed distribution of patents,
however, suggests that the difference results
from a small number of exceptionally pro-
ductive Bay Area companies (Owen-Smith
and Powell, 2006).
More interesting, however, are the consid-
erable differences we observe in the citations
Boston and Bay Area firms make in their
patents. These data suggest that Boston
biotechs routinely engage in exploratory
innovative search, which typically yields a
few very high impact patents at the expense
of numerous innovations with lower than
average future effects (Fleming and
Sorenson, 2001). In contrast, the dominant
Bay Area patenting strategy appears to be a
more directed and incremental, ‘exploitation’
strategy; exactly as that is what one might
expect of companies supported by investor
networks that demand demonstrated progress.
Companies that pursue exploitative strategies
generally develop numerous related improve-
ments on established components of their
research trajectories. Exploratory Boston
area companies are much more reliant on
citations to prior art generated by universities
and public research organizations, while are
exploitative Bay Area companies rely heavily
on citations to their own prior art. Indeed,
71 percent of the patent citations by Boston
companies are to prior art developed outside
of biotech firms.
How might such differences in patenting
be reflected in the kinds of products released
by the companies? We used the Food and
Drug Administration (FDA) approval records
to identify the 58 new drugs developed by
Boston and Bay Area biotech firms. Fifty-
three of these medicines were approved
between 1988 and 2004. All of the drugs that
appeared on the market prior to 1988 were
developed by just two Bay Area firms, Alza
and Genentech. These early approvals reflect
the characteristic Bay Area commerciali-
zation strategy. We find that the Boston-
based companies had a stronger focus on
orphan drugs aimed at patients with rare
diseases. In 1983, the Orphan Drug Act was
created to speed the development of thera-
pies for rare diseases by offering tax breaks
and regulatory assistance to organizations
that would develop medicines for small
market medical needs. Many Boston-based
firms have chosen to focus on orphan drugs,
as one might expect of companies that are
enmeshed in networks that are dominated by
universities and hospitals. In contrast, Bay
Area biotech firms have pursued medicines
for larger markets in which the potential
patient populations run into the millions, and
for which there is likely to be stiff product
competition. This high-risk, high-reward
strategy shows the imprint of the venture
capital mindset.
We did a paired comparison of two drugs:
Betaseron, developed by the Bay Area
firm Cetus, which was eventually acquired
by Chiron, a Berkeley-based biotech firm;
and Avonex, developed by Boston-based
Biogen in tandem with Berlex Laboratories,
an American subsidiary of the German
pharmaceutical firm Schering-Plough.
We compared these similar drugs by
looking at FDA labeling information
and patenting citations to prior art. These
two drugs are biologically and chemically
comparable. Both are therapies for the same
disease, recurring and remitting multiple
sclerosis. Betaseron relies on a set of four
patents, three initially assigned to Cetus
and reassigned to Chiron following the
merger of the two firms, as well as one
process patent, which was reassigned to
Berlex Labs. These four patents cite a
small group of prior art patents, and in
turn, a larger group of second generation
citations. In sum, Betaseron rests on a
history of some 55 interlocking patents,
almost all of which are based on intellectual
property owned by companies.
Avonex, developed by Biogen, is based on
a single compound patent, but it reached
 NETWORKS AND INSTITUTIONS
more broadly into the prior art, relying on
155 separate pieces of intellectual property.
Not a single piece of the prior art on which
Avonex depends is owned by Biogen, sug-
gesting that Biogen developed its market-
leading therapeutic drug without the benefit
of a thicket of intellectual property rights,
and relied instead on a mix of public domain
science and its partners’ intellectual property.
Obviously, internal R&D was critical to the
development of both drugs, but Biogen’s
much heavier reliance on public science
reflected the local network characteristics
of Boston. Indeed, among the holders of
prior art patents for Avonex are MIT and the
Massachusetts General Hospital.
Citation network comparisons for similar
drugs offer an interesting natural experiment
that holds constant technical, clinical, and
regulatory features of the innovation process.
Even when such factors are quite similar, the
patent citation networks underlying these
two drugs differ in a manner that reflects
the larger institutional environment of the
regional innovation system. The Bay Area-
based drug relies more heavily on internal
R&D and on research efforts of other firms,
while the Boston-based therapy draws on a
broad cross-section of prior intellectual
property owned by a wide range of different
types of organizations.
Our comparison demonstrates that the
two networks bear a strong institutional foot-
print. Bay Area firms were faster, more pro-
lific in terms of new product development,
and more likely to pursue novel medicines
for large markets. In contrast, Boston firms
were more deliberative in their commercial
strategies and more likely to focus on medi-
cines for identifiable undoserved patient
populations in need of relief from specific
illnesses. We conjecture that the organiza-
tional development and innovation processes
were significantly influenced by the sur-
rounding institutional environments. Boston
is home to MIT, a powerful basic science
institution that lacks a medical school,
Harvard, a world-class institution rich in
basic science with a notable medical school,
613
and numerous leading research-oriented
hospitals and health institutes. The upshot
of this institutional mix appears to be a
corporate focus on expansive science and
new treatments for definable patient
populations.
In contrast, the biotech community in
the Bay Area had its earliest origins in the
partnership of Herbert Boyer, the UC San
Francisco scientist, and Robert Swanson, a
prominent venture capitalist, who joined
together to create Genentech, one of the first
biotech companies, and long a bellwether of
the industry. UCSF is an unusual institution
that lacked disciplinary departments in the
full range of research programs. The organi-
zational model at UCSF was interdiscipli-
nary, with a cross-functional approach to
medicine and an emphasis on translating
basic science into clinical applications
(Varmus and Wineberg, 1992). Genentech
adopted and refined UCSF’s interdisciplinary
team model, adding the impatience and
restlessness of venture capital financiers
with their focus on swinging for the fences.
Thus, the company has pursued new medical
products for illnesses suffered by millions.
This contrast of Boston and the Bay Area,
the most prolific biotechnology clusters in
the world, gives considerable insight into the
manner in which the institutional field
shapes the formation of networks. Our
examination of two important biotechnology
regions demonstrates that logics of action
shaped by growing network structures
influences both the habits of mind and the
type of products that companies develop.
SEEING THE FIELD IN
PERFORMANCE
Linking relationships and categories through
situated action requires us to understand how
individuals draw on and modify seemingly
stable, persistent networks and classifications
in daily practice. We draw on examples
from Owen-Smith’s (2001) ethnographic
614 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
work in a multidisciplinary neuroscience
laboratory to explore how scientists use
existing categories and relationships to
make sense of and maneuver within their
fields. The particular logics associated with
different scientists, technicians, researchers,
and students, and the varieties of capital
(resources) that can be derived from their
positions and relationships have primacy in
shaping both identities and opportunities.
In the H-lab3 – a large, multidisciplinary
academic neuroscience group that conducts
fundamental research on olfaction in the
moth Manduca sexta – Owen-Smith found
that collective opportunities for skepticism
were shaped by relative positions within the
laboratory as well as expectations based on
the ascribed skill and disciplinary affiliations
of participants. In the scientific field,
skepticism is a core aspect of the logic by
which novel claims are validated.
In an arena where tacit knowledge made
direct replication problematic and the
multidisciplinary insights needed to pursue
the research nevertheless resulted in widely
different competencies, public performances
of skepticism and resistance became key
features of training and knowledge produc-
tion. Even though public episodes of
skepticism were clearly improvisational,
they occurred against the backdrop of well-
understood (though rarely articulated)
norms of appropriateness. Those standards
were structured by the relationships (of men-
torship, collaboration, and sponsorship),
categories (disciplines, methods, audiences),
and hierarchies (status) that characterize
scientific fields. The stage for particular
skeptical performances was thus neither
flat nor neutral. Scientists’ career trajectories
and the fate of new knowledge claims owed
much to the skilled performance and recep-
tion of skepticism.
Fligstein (2001) identifies social skill
with the ability to induce cooperation from
others.4 This view of skill is apparent in
individual scientist’s abilities to convince
skeptical peers of the quality and validity of
their findings. Such skilled performances,
Owen-Smith’s field-work suggests, are dif-
ferentially enabled by scientists’ disciplinary
affiliations. Disciplines have different sta-
tuses in the academic field and participants
draw on broad expectations of disciplinary
competence in assessing scientific claims.
Discipline is a means to position an
individual and his or her claims in a
general status hierarchy and a tool for
making sense of their competencies. Bio-
physicists, for instance, are accorded differ-
ent degrees and types of leeway in skeptical
interactions than chemists or ecologists,
even if their claims do not rest explicitly on
the particular competencies associated with
their discipline. In practice, comparable
findings presented by scientists whose
disciplines differ can meet with disparate
skeptical reactions.
Relationships matter equally as much as
disciplinary categories, however. New find-
ings are also evaluated in light of the individ-
uals whose research produced them.
Collaboration is a clear example. The vast
majority of empirical articles in neuroscience
have multiple authors. In the life sciences,
authorship apportions credit according to a
well-understood formula.5 Co-authorship has
long been understood as a means for scien-
tists to invest established stores of profes-
sional credibility in findings and colleagues
(Latour and Woolgar, 1976). But in categori-
cally and hierarchically differentiated fields,
such investments can be double-edged.
Here, relationships serve as important con-
duits of information and material resources,
but they are also key prisms for evaluating
new claims under conditions where direct
monitoring and replication are implausible or
impossible.
Consider a skeptical performance that
takes discipline, status, and relationships into
account simultaneously (Owen-Smith 2001:
445 fn). In addition to serving as a means to
validate findings developed ‘locally’ in the
laboratory, collective skepticism was a means
by which members of the laboratory deter-
mined which ‘external’ claims could be
trusted and whether findings that contradicted
 NETWORKS AND INSTITUTIONS
their own needed to be taken into account.
In one instance, Owen-Smith observed a long
discussion of a working paper from outside
the H-lab that purported to contradict one of
the group’s primary findings. The paper gen-
erated heated discussions, including one
interchange between Beth (a technician in the
lab) and Jim, the group’s principal investiga-
tor. They discussed a paper authored by
Blanca, a post-doc in a Scandinavian labora-
tory, and Bill, that laboratory’s principal
investigator (PI) and a former student in the
H-Lab. In this interaction the categorical
implications of Blanca’s discipline (she is a
chemist) and of her collaborative relationship
with Bill loomed large, as does Bill’s relative
status in the field and the legacy of his time in
the H-lab.
Beth: You might also want to ask her about
her method. Before she came here she
worked on really small beetles. That is a
really difficult animal. She is an expert
with these methods and she has techniques
that we do not. Also, she is really good
with chemistry. She has a really strong
background, stronger than anyone here. So
the answer to your implication that she
hasn’t thought through her controls is that
she probably has!
Jim: There’s no question about the chem-
istry, but she is working in Bill’s lab and
we know that Bill is a little too flamboyant
with his methods.
This snippet of conversation is part of a
larger, collective skeptical performance that
drew on categorically based expectations
(e.g. chemists are good at structuring experi-
mental controls), ascribed levels of individ-
ual skill (e.g. working with a difficult model
animal results in better technique), and past
relationships (e.g. evaluations of Bill’s scien-
tific competency based on his time in the
H-lab), as well as present ones (e.g. Jim’s
insistence that Blanca’s discipline and skill
be interpreted in light of her senior
co-author). Such performances were disci-
plined by logics of action native to the
615
broader field (e.g. standards of presentation,
means of apportioning credit via authorship),
but relied on a mix of local and global stan-
dards of appropriateness.
In instances like this one, local action and
situated performances bring categories, hier-
archies, and relationships together in mean-
ingful efforts to navigate a field. Global
features of the field of neuroscience – a mul-
tidisciplinary endeavor that plays out on a
status-differentiated pitch where collabora-
tions are fundamental to claims-making and
evaluation – are apparent in the local interac-
tions of skilled scientists. Convincing one
another of the validity (or lack thereof) of
particular claims required both careful
rhetorical effort and the ability to draw the
broader field and its conversations into spe-
cific performances.
PERFORMANCES CAN CHANGE
FIELDS
Observations in the H-lab clarify some of the
ways that categories and relationships get
imported into local performances. We also
suggest there are (perhaps fewer) instances
where situated action can shift the categori-
cal and relational features of fields. We offer
a pair of examples drawn from Owen-
Smith’s field work in a high-profile univer-
sity technology licensing office (TLO)
(Owen-Smith, 2005, 2007)6.
Like the H-lab, the TLO is a university-
affiliated workplace situated in a differenti-
ated, hierarchical field. Where work in the
H-laboratory is focused on scientific
attempts to understand the neuroscience of
olfaction, the TLO’s goal is to identify,
manage and market potentially valuable
technologies for ‘society’s use and benefit
while generating unrestricted income for
research and education.’ The TLO is a
boundary-spanning administrative unit
where work is framed as a service to faculty
researchers and industrial partners. The
office’s staff comprises individuals who
616 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
typically hold bachelor’s (and in some cases
master’s) degrees in technical fields.
Because this office spans the boundary
between academe and industry, its work can
be understood in light of multiple logics. In
most instances, licensing associates can draw
on one or more ‘appropriate’ logics as they
make decisions. Because the office opts not
to employ legal counsel, the staff has few
normatively ‘correct’ approaches to prob-
lems encoded in their training. These features
and the prestige of this office make the TLO
a fertile site for local action that can reshape
broader arrangements.
The TLO is one of the oldest and most
accomplished offices of its kind. As a result
the office, its staff, and (especially) its direc-
tor, occupy prominent positions in the rela-
tively new field of university technology
transfer. Unlike academic life science, the
professional field of university technology
transfer is still developing. Where skeptical
evaluations in the H-lab draw explicitly on
the broader landscape of scientific norms,
similar collective performances in the TLO
are overwhelmingly local and only rarely
reach beyond the university (Owen-Smith,
2007). The TLO’s highly visible position in
the field, combined with its enviable record
of success, results in its being widely emu-
lated. Thus, the outcomes of actions taken in
the confines of the office often get trans-
ferred out into the broader arena where they
alter the shape of relationships and help to
create or modify emerging categories of pro-
fessional action.
Much of the daily work of the TLO is
informed by routine meetings characterized
by improvisational efforts to make sense of,
evaluate, and respond to scientific findings
couched as ‘invention disclosures.’ In the
TLO, those evaluations take the form of
efforts to determine what kind of technologi-
cal innovation is embedded in a scientific
discovery and what sort of market that inno-
vation might reach. Both of these decisions
are acts of classification, and once they are
made, TLO staff members (singly and, often,
collectively) develop a plan for marketing
and licensing the invention.7 Marketing plans
typically begin by ‘shopping’ an invention to
potential licensees. Classifying a technology
in terms of existing markets and products
triggers licensing officers’ efforts to search
their ‘mental rolodexes’ for appropriate
partners. Prior licensing relationships are
highly salient to that process.
Collective licensing discussions in the TLO
typically address difficult cases. More
straightforward deals are the province of indi-
vidual staff members. The most common form
of difficulty arises as a result of the conflicting
logics under which university technology
transfer operations function. Recall the TLO’s
mission, which combines a focus on income
generation from licensing and efforts to
ensure broad public access to technologies
that are often developed with federal R&D
funds. This mission puts the TLO and other
offices like it squarely at the intersection of
business logics that emphasize revenues and
academic logics that emphasize open access
and the public good. That tension is palpable
in discussions about whether federally funded,
university-developed technologies should be
licensed exclusively or non-exclusively. The
former can be particularly lucrative (espe-
cially if equity ownership in a start-up com-
pany is a condition of the deal), but comes at
the expense of access. While they sometimes
generate extensive revenues, non-exclusive
licenses often forgo a high financial upside to
keep a new technology accessible.
The technologies with the greatest poten-
tial value often have the broadest appeal. As
a result, university technology managers
routinely find themselves adjudicating
between more academic and more commer-
cial approaches to their deals. In the TLO,
this dilemma is commonly solved by writing
‘field-of-use’ (FOU) deals that grant
exclusive rights to different aspects or uses of
a technology to disparate licensees. As the
TLO’s director noted in an interview (Owen-
Smith, 2005: 83):
Almost everything we do is field-of-use. The posi-
tive side of that is that you can get more than one
 NETWORKS AND INSTITUTIONS
license in different fields. But there is also a nega-
tive side. If there is a problem with a patent, or a
relationship, then you have compounded your
difficulties if you have licensed it to multiple
entities.
This brief description of a common response
to one of the TLO’s primary institutional
contradictions implies both the local chal-
lenges and the global effects of widespread
reliance on this strategy. First, locally, TLO
associates who are often ill-prepared to deal
with highly technical inventions must
partition early-stage technologies into multi-
ple fields of use that can be separately and
independently licensed. Such efforts at dis-
tinction are often imperfect, and raise subse-
quent problems. More globally, when
FOU licenses convey rights to the same tech-
nology to licensees in widely disparate
industries, one effect is to make the TLO
(and the university that houses it) a network
‘short-cut’ between firms that might other-
wise share no (or at least few) connections or
affiliations.
In other words, local decisions in the TLO
can yield changes in the relationships and cat-
egories of larger fields by bridging otherwise
separate licensees. To the extent that
imperfect efforts to define fields of use are
likely to create later problems, FOU deals
may be more likely to deeply entangle differ-
ent licensees. Consider the example of
an invention disclosed by a prominent
biochemist. The technology – a compound
that interrupts the metabolic processes
of a particular bacterium and kills it – has
multiple uses.
The bacterium in question produces a
sticky plaque that, if found in veins, has been
implicated in heart attacks. If the bacterium
inhabits a washing machine, however, the
plaque results in smelly clothes. The
compound, then, can be understood as a
component in laundry detergent or as a phar-
maceutical aimed at the cardiovascular
market. Both are potentially profitable uses
but, technically speaking, it is difficult
to define separable fields of use because
the mode of action of the detergent and the
617
therapy is difficult to distinguish. As a result,
efforts to partition this technology to allow
for exclusive licensing to a pharmaceutical or
biotechnology company, and non-exclusive
licensing to manufacturers of laundry deter-
gents may be imperfect. Problems that result
from trying to forge this separation may have
the unintended effect of creating relation-
ships across industrial categories that other-
wise might remain unconnected.
Local evaluations of scientific findings in
the H-lab draw broader categorical and rela-
tional characteristics into situated perform-
ances. In contrast, similar efforts in the TLO
have some potential to alter the relationships
and categories of the larger field. Clearly,
efforts in the H-lab could also remake its
field by, for instance, making fundamentally
novel discoveries about the neuroscience of
olfaction. We do not wish to argue perform-
ances on some stages can only draw upon their
larger contexts while others can alter them.
Instead, we wish to suggest that a network-
institutional theory sensitive to genesis and,
particularly, change should have some way to
account for when and why local action shifts
larger fields. We believe that attending to the
existing stability of a field and to the relative
positions of actors within them offers some
useful starting points. It matters, for instance,
that the H-lab is an important but not domi-
nant player on a large and established field
while the TLO is (arguably) one of the
dominant players on a relatively young and
growing field.
CONCLUSION AND FUTURE
DIRECTIONS
We argue that understanding the characteris-
tics and effects of social and economic
systems requires simultaneous attention to
the categorical and relational features of
fields. Institutions and networks are inter-
twined in canonical theoretical and empirical
works in sociology and organizational
theory. Perhaps more importantly, master
618 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
concepts in institutional and network
theory – fields, logics, embeddedness, and
social capital – are shot through with both
institutional and relational terminology.
Throughout our discussion, we return to the
dual relationship between social relation-
ships and social categories that we take to be
at the heart of a unified, ‘network-institu-
tional’ approach to social and economic life.
Networks are essential to fields because
they are both the pipes through which
resources circulate and the prisms that
observers use to make sense of action. Fields,
though, are associated with particular logics
of action and it is those logics that make net-
works efficacious by determining which
sorts of relationships participants can con-
ceive. More tellingly, the dominant logics in
a field define which sorts of connections will
have what types of effects for different kinds
of partners. In this sense, the relational and
structural embeddedness of economic action
depends not just on networks but also on the
orientations of participants to the fields and
logics that render ties sensible and help
determine the shape and effects of structures.
Social ties and affiliations are not all of a
piece. Similar activities and structures may
have different implications depending on the
institutional character of participants. Even
the most purely structural definition of, for
instance, social capital must take institutional
context into account. Institutions and net-
works jointly determine when various sorts
of capital can be invested, by whom, and
with what expectations of returns.
We argue that networks and institutions
are co-constitutive. They set the conditions
of possibility for each other. At base, we take
this co-evolutionary relationship to rest on a
key duality between relationships (the build-
ing blocks of networks) and categories (the
building blocks of institutions). The situated
and often improvised performances of highly
bounded, but nonetheless purposive, organi-
zational and individual agents breathes life
into this duality, and, over time, provides a
motor for evolution and change. We expect
the link between practical action, networks,
and institutions will be particularly apparent
(and important) in situations where roles and
identities are ambiguous, logics and institu-
tions are conflicting or multiple, and net-
works span diverse audiences.
We revisited some of our empirical work
on biotechnology, scientific collaboration
and university technology transfer to exam-
ine a few specific implications of our
approach. Our discussion highlights four
issues where we believe further research can
forward a network-institutional theory. We
summarize those analytic questions and then
suggest some concrete methodological
implications for future studies of networks
and institutions.
First, we contend that studies of evolution
and change in social systems must take
into account the recursive nature of networks
and institutions. Explaining the contempo-
rary character of biotechnology requires
attention to the field’s history and to the par-
ticular tensions that regulatory regimes and
market competition create. More impor-
tantly, we suggest, such an explanation
requires that we attend to the process by
which collaborative relationships and
network structures alike come to have the
implications and effects they do because of
their institutional context. As a result, we
argue that studies of social dynamics must
integrate network and institutional concepts
and constructs.
Networks must be understood in the
context of institutional arrangements and
their institutional embeddedness shapes
categories and products. Our examination
of innovation in the San Francisco Bay
Area and Boston biotechnology regions
reinforces the important role network
connections play in explaining outcomes.
We add to that a recognition that the institu-
tional characteristics of a network alter
both the character of what participants
produce and the process of production. The
features and evolution of social systems, as
well as their substantive outcomes, are
shaped by the joint pressures of networks and
institutions.
 NETWORKS AND INSTITUTIONS
Both of these arguments rest on a belief
that participants’ strategies and rationalities
are shaped by their network-institutional
context. We suggest that macro-organiza-
tional efforts should attend more closely to
behavior. Whether that attention focuses on
the practical and situated performances of
individuals or on re-integrating a behavioral
theory of organizations into network and
institutional analyses depends primarily on
levels of analysis and topics. We shift focus
from the dynamics of industry-wide net-
works to situated action in bounded organi-
zational settings to emphasize the links
between activities on the ground and broader
categorical and relational constraints.
We argued that attention should be paid to
seeing fields in performances. Individuals
and organizations act in contexts structured
by relationships, categories, and hierarchies.
But such contexts cannot completely deter-
mine action and sources of constraint can
offer unexpected opportunities to players
whose positions and characteristics offer
them room to maneuver. If, as we contend,
networks and institutions are yoked together
by situated action, then studies of local
action must take relevant relationships,
categories, and logics into account.
We do not wish to suggest, however, that
the flow of influence is uni-directional. For
networks and institutions to be recursively
related through action, the endeavors of par-
ticipants must have some possibility of influ-
encing their larger social environment. More
effort should be put to uncovering the situa-
tions and conditions under which local per-
formances shift the structural and institutional
features of fields. Because the macro-social
world is obdurate, action in some locales
must be more likely to effect change than
efforts in others. More attention should be
paid, then, to the relational and categorical
sources of innovation in fields. Even within
locations that are situated to effect shifts in
their wider contexts, not all actions or partic-
ipants are equally likely to have a broader
influence. As a result, we suggest that more
studies should focus on the conditions under
619
which particular practices and innovations
diffuse or fail by making rules and practices
themselves the unit of analysis.
Finally, our sketch of a network-institu-
tional approach to social organization carries
methodological implications. We note that
studies at multiple levels of analysis – ranging
from practices, to activities, organizations,
dyads, collectives, structures, and fields – are
necessary. More importantly, temporality and
dynamics are at the center of our analyses.
Seeing the interplay of networks and institu-
tions, we contend, requires more than cross-
sectional explanations of variation. Instead,
efforts to track change in the categorical and
relational features of social worlds over time
are needed. Finally, we include a call for
comparison. Each of the studies we discuss
attends either to locally fluid behaviors or to
change over time in a single field. Variations
in networks and institutions, which can all too
easily be treated as ubiquitous and invariant
characteristics of social realms, may be more
apparent when we adopt a lens that empha-
sizes comparative dynamics.
NOTES
1 Obviously, there are several notable exceptions,
where more explicit conceptual connections are
offered. See Mizruchi, Stearns and Marquis, 2006;
Strang and Meyer, 1994; Zuckerman, 1999;
Zuckerman, Kim, Unkawa, and von Rittman, 2003;
Powell, White, Koput, and Owen-Smith, 2005.
2 In this regard, see the chapters on the
micro-level roots of institutional theory in this
volume (Powell & Colyvas, Chapter 10 and Barley,
Chapter 20), as well as Barley and Tolbert (1997);
Hallett and Ventresca (2006).
3 In order to maintain confidentiality we refer to
the H-Lab and its occupants using pseudonyms.
4 In this regard, see also Callon (1986) and
Latour (1987) whose formulations of actor-network
theory emphasize the differential abilities of individu-
als to enroll disparate allies and maintain the
stability of diverse constellations of relationships. This
sense of skill was also at play in the H-lab where sci-
entists whose ‘golden hands’ routinely yielded partic-
ularly compelling experimental data were accorded
greater deference than their less dexterous col-
leagues.
620 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
5 The first author is usually a junior scientist
responsible for the bulk of the ‘bench’ work that sup-
ports a particular claim. The last author is typically a
senior scientist who ‘owns’ the lab in which the work
occurred and may have played a significant role in
designing experiments and framing questions. Other
authors are typically arrayed alphabetically or in a
fashion that places the least important participant
nearest the center of a long list. While they are rarely
explicitly articulated, such authorship rules represent
another characteristic logic that lets participants eval-
uate claims and scientists by attending to researchers’
relative positions in author-lists and to the strength of
a finding’s association with high-profile scientists.
6 All names are pseudonyms.
7 A license is a deal that transfers the right to use
an invention or material that is protected by some
form of intellectual property from the property’s
owner (in the case a university) to a licensee (most
often a firm) that hopes to develop it. Licenses can
convey exclusive rights, non-exclusive rights, or some
limited form of exclusivity.
ACKNOWLEDGEMENTS
We are grateful to Royston Greenwood for
comments on an earlier draft.
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Institutional-Level Learning:
Learning as a Source of
Institutional Change
Pamela Haunschild and David Chandler
INTRODUCTION
Institutional theory tells us that as a new idea
or business practice diffuses through a popu-
lation, some firms adopt it early on for effi-
ciency reasons (they have considered the
merits of the idea and believe it to be benefi-
cial to their business), while others resist
until later in the diffusion curve (they are
either not aware of the idea or do not feel it is
applicable or advantageous to their situa-
tion). When these later adopters do finally
succumb, they do so out of social pressures
to conform and believe that the primary ben-
efit for adopting is the legitimacy gained by
acceding to societal norms (Galaskiewicz,
1985; Parsons, 1956; Suchman, 1995).
For these later adopting firms, institu-
tional theory tells us that the prospective effi-
ciency benefits of the idea in question are
not a concern – they have either not been
considered, or are believed to be too slight
to be of significant value to the firm
(Westphal, Gulati, & Shortell, 1997; Zajac &
Westphal, 2004).
26
It is not clear, however, that this
dichotomy of economic (early) versus insti-
tutional (late) actors provides a sufficiently
comprehensive spectrum of adoption behav-
iors by firms. Consider the example of Wal-
Mart, which has started to adopt social
responsibility practices, particularly in rela-
tion to environmental sustainability1 (includ-
ing the launch of its ‘Sustainability 360’ plan
in February, 2007),2 and is recognized as
being relatively progressive in this respect by
a broad section of the media.3 An institu-
tional theorist might argue that this adoption
behavior (which is occuring later, in the dif-
fusion cycle) happened because the idea of
environmental sustainability (going green)
had diffused throughout society to such an
extent, and the firm was facing so much crit-
icism for its failure to adopt previously, that
it adopted in search of social legitimacy
(DiMaggio & Powell, 1983; Meyer &
Rowan, 1977). This pattern of behavior, how-
ever, would be out of character for a firm that
focuses so strongly on minimizing operating
costs and passing those cost savings on to
 INSTITUTIONAL-LEVEL LEARNING: LEARNING AS A SOURCE OF INSTITUTIONAL CHANGE
customers in the form of ‘Always Low
Prices,’4 and that has resisted conforming to
pressure on several previous occasions.5
An alternative explanation of Wal-Mart’s
decision to make a large-scale move into the
green area is that it is learning from the expe-
rience of other firms who have already gone
green, and is adapting its own behavior
accordingly. Once the diffusion of an idea has
progressed beyond its initial stages, a track
record of success and failure of firms that pre-
viously adopted similar policies is established,
and firms pressured to adopt at later stages are
sometimes able to cherry-pick the most appro-
priate (and potentially profitable) policies that
suit their situation and needs, while still con-
forming to institutional norms that dictate
some form of response. We suggest that this is
a possible driver of the decision to adopt an
idea or business practice by firms later in the
diffusion curve that is not theoretically inte-
grated within the institutional literature. Thus,
institutional theory would currently say that
Wal-Mart is simply responding to societal
pressure and legitimacy threats. Yet Wal-Mart
could instead (or also) be learning from the
experiences of prior adopter firms and adopt-
ing these policies later in the diffusion
process, at least partially, for anticipated effi-
ciency benefits. For example, Wal-Mart’s
decision to start selling organic foods might
have been stimulated by the success of Whole
Foods and other organic retailers. At the same
time, however, Wal-Mart is showing consis-
tency with the institutional environment
(going green) with statements about how the
firm wants to ‘democratize organic food,
making products affordable for those who are
reluctant to pay premiums of 20 percent to
30 percent.’6 The dual institutional/efficiency
rationales inherent in Wal-Mart’s activities are
also reflected in statements by one senior level
executive who admitted that he was initially
unenthused about going green, because he
thought such a move was all about ‘saving the
whales and the trees.’7 He became more
enthusiastic when he realized that these prac-
tices could increase Wal-Mart’s efficiency
through lower costs.
625
This expanded perspective still recognizes
the institutional pressures to adopt that Wal-
Mart faces (like all firms, Wal-Mart is suscep-
tible to the increased prevalence of calls for
greater social responsibility and was likely
disturbed by the criticism it was facing in this
respect), but it also provides an additional
explanation of observed behavior that is more
consistent with the firm and its corporate
strategy. The concept of inferential learning8
(Miner & Haunschild, 1995), placed in this
context, implies that firms facing strong
institutional pressures are not stuck with
adopting unprofitable practices – they have
the potential to learn from the successes and
failures of earlier adopters to maximize the
efficiency benefits they receive from adopt-
ing later in the diffusion curve. Wal-Mart is
responding to institutional pressures, but is
doing so in a way that provides anticipated
economic benefit.
This complicated, cause-effect process of
change concerning firm adoption behavior
blends two large bodies of work in organiza-
tion theory – institutional theory and
the organizational/interorganizational learn-
ing theories. On the one hand, institutional
theorists recognize that firms are susceptible
to coercive, normative, and mimetic isomor-
phic forces (DiMaggio & Powell, 1983;
Scott, 2001) and that such social pressures to
conform are powerful predictors of firm
behavior – usually seen as independent of, or
even in opposition to, economic benefit. On
the other hand, however, a learning perspec-
tive provides an explanation of firm behavior
that allows for firms to respond to social
pressures in ways that are economically ben-
eficial. We contend that it is only when this
learning perspective is added to the institu-
tional perspective that a more complex,
holistic change process that spans the com-
plete range of potential firm behavior in the
face of institutional forces can be appreci-
ated. Our understanding of the various
conflicting interests, motivations, and learn-
ing processes that interact to instigate change
is enhanced by this blend of learning and
institutional theories.
626 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
To some extent, the thesis we present
in this chapter builds on existing research
within institutional theory and concepts
already embedded in learning theories,
such as the concept of mimetic learning –
consciously or unconsciously learning from
the routines, actions, and outcomes of others
(Miner & Mezias, 1996). Mimetic learning is
quite similar to the concept of mimetic iso-
morphism (DiMaggio & Powell, 1983) and
both concepts are usually measured as the
prevalence of adoption by other firms in a
given field (e.g., Greve, 1998; Haunschild
& Miner, 1997). In other ways, however, we
draw on unique work within the learning the-
ories in areas that institutional theory has yet
to explore fully, such as the process of infer-
ential learning (Miner & Haunschild, 1995)
and the emergence of unintended conse-
quences from everyday routine actions
(March, 1981).
Applied examples of the benefits of inte-
grating these two theories exist all around us.
As with the Wal-Mart example outlined
above, it is relatively easy to think of cases
where both theories collectively provide a
more effective explanation of the antecedent
conditions, processes, or outcomes of organi-
zational action. It is to be expected that these
two theories interface across multiple aspects
of organizations’ day-to-day activities. After
all, institutional theory is primarily an
attempt to locate the organization within its
social and cultural context and analyze the
extent to which social institutions (rules, rit-
uals, routines, beliefs, and so on) shape
organizations as they pursue the legitimacy
necessary to ensure success and survival over
the long term (DiMaggio & Powell, 1983;
Meyer & Rowan, 1977; Suchman, 1995),
while learning theories seek to explain the
shaping of organizations through the interac-
tion and influence of various social and
cultural forces (Huber, 1991; Levitt &
March, 1988).
It is our contention, therefore, that under-
standing the processes and consequences
of organizational and interorganizational
learning as firms adapt to their evolving
sociocultural environment can contribute sig-
nificantly to institutional theory in explaining
institutional change (Dacin, Goodstein, &
Scott, 2002). Yet, in spite of these potential
benefits, the intersection of these two theo-
ries has received scant attention from schol-
ars to date. An attempt to identify where
these two literatures overlap, so that knowl-
edge is shared and replication is avoided
(wherever possible), constitutes, we hope, a
constructive addition to the institutional
theory literature.
We start with a definition of the process
that constitutes the focus of this chapter, a
process we call Institutional-Level Learning.
Institutional-level learning occurs when
institutions9 change due to some learning
experience. Such change might result from
three possible sources: (1) an institution
might evolve deliberately over time, adapting
to field-level changes in experience affecting
values, beliefs, and attitudes; (2) an institu-
tion might be affected by a specific agent
of change (an institutional entrepreneur) that
learned from its own experience or the
experiences of others and initiated change; or
(3) an institution might undergo unin-
tended change as the result of boundedly
rational action, imperfect imitation, or ordi-
nary routines that led to unintended
outcomes.
In terms of the structure of this chapter, we
begin by discussing definitions of organiza-
tional learning and identifying how they
relate to institutional change. We then provide
a brief overview of how institutional theory
has begun to incorporate the concepts of orga-
nizational agency and address the notion of
active change. Shedding further light on the
relatively unexplored area of overlap
between the two bodies of work, we then
consider how organizational learning theo-
ries can inform institutional theory by high-
lighting a number of important mechanisms
by which institutional evolution and change
occur, but which the institutional literature
has yet to incorporate. These mechanisms
 INSTITUTIONAL-LEVEL LEARNING: LEARNING AS A SOURCE OF INSTITUTIONAL CHANGE
include the following: institutional change
resulting from the unintended outcomes of
everyday action; interfirm and inter-popula-
tion learning processes that flow along geo-
graphic and network lines; change produced
through imperfect mimesis; change produced
by field-level underperformance and slow
adaptation processes; institutional change
resulting from unlearning caused by factors
like field-level personnel turnover; efficiency-
based change due to inferential learning from
earlier adopters; and institutional change
driven by heterogeneity in regulation, firm
responses to regulation, and competition
based on novelty or extreme values.
We believe that these mechanisms provide
a research agenda for future work within
institutional theory that begins to address
some of the unanswered questions generated
at the boundary of these two important
organization theories.
ORGANIZATIONAL LEARNING
AND INSTITUTIONAL CHANGE
We begin by discussing definitions of organi-
zational learning, its fundamental assump-
tions, and identifying how learning relates to
institutional change. These definitions and
assumptions form the foundation upon which
we analyze the intersection between institu-
tional and learning theory.
The literature on organizational learning is
large and does not fit well into any single
classification scheme. Several good reviews
of the literature exist (Argote, 1999;
Easterby-Smith, 1997; Fiol & Lyles, 1985;
Hedberg, 1981; Huber, 1991; Levitt &
March, 1988; Shrivastava, 1983); thus, we
will not attempt to replicate such work here,
except to indicate the definitions of key terms
that inform our discussion of organizational
learning in an institutional context. In terms
of specific definitions, Huber (1991: 89)
breaks his review of organizational learning
into four constructs: knowledge acquisition;
627
information distribution; information inter-
pretation; and organizational memory, defin-
ing learning in its broadest sense:
learning need not be conscious or intentional ....
Further, learning does not always increase the
learner’s effectiveness, or even potential effective-
ness. ... Entities can incorrectly learn, and they
can correctly learn that which is incorrect. Finally,
learning need not result in observable changes in
behavior. ... An entity learns if, through its process-
ing of information, the range of its potential
behaviors is changed. [Emphasis in original.]
Another classic definition of learning
comes from Levitt and March (1988: 320),
who note that organizations are ‘seen as
learning by encoding inferences from history
into routines that guide behavior.’ The impor-
tant characteristics of these definitions for us
are the following: (1) routines are independ-
ent of individual actors and are history-
dependent; but (2) they change based on
interpretations of past experience (interpreta-
tions that are not necessarily coherent); and
(3) they change as new experiences accumu-
late. Such experiences can be the individual
actor’s own experience or the experiences of
others that the actor has observed. Thus,
learning and change, whether deliberate or
unintended, are unavoidably intertwined.
Much of the empirical work on learning is
focused on examining the impact of these
various types of experiences on organiza-
tional outcomes, generally in the form of
improvements. Early work tended to be
based on a learning curve perspective
(Lieberman, 1984), predicting and finding
positive returns to gaining experience
(Dutton, Thomas, & Butler, 1984). Much of
this early work was conducted in manufac-
turing settings, but recent work has moved to
more complex empirical contexts like strate-
gic decisions (Beckman & Haunschild, 2002;
Hayward, 2002). Empirical research in the
learning literature has also moved away from
a focus on the amount of experience to a
more comprehensive view of different types
of experiences; for example, experiences
gained in heterogeneous as opposed to
628 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
homogeneous settings (Miner, Haunschild,
& Schwab, 2003). There is also a growing
body of empirical work on the conditions
that stimulate learning and change. In this
vein, Cyert and March’s (1963) behavioral
theory of the firm provides the foundation for
understanding aspiration levels (both indi-
vidual and social) as a determinant of change
(Greve, 1998).
A further contribution in understanding
the concept of learning on a more macro
level was made by Miner and Haunschild
(1995), who explicitly moved the definition
of learning to the population (or field) level
of analysis. They achieved this by defining
learning at that level as occurring from
changes in population level routines that are
based either on the experiences of that popu-
lation or of another population whose experi-
ences can be observed. This higher-level
view of learning makes the concept much
more accessible to institutional theorists in
terms of definition, level of analysis, and
accounting for how change occurs at the
field-level.
In two important respects in relation to our
thesis, however, organizational learning
departs from the fundamental assumptions
that have informed much of the more recent
work within institutional theory – level of
analysis and change processes.
Levels of analysis
Aside from Miner and Haunschild’s (1995)
expansion of the learning literature to con-
sider population-level learning, much of the
work within the learning literature has been
conducted at the individual (Simon, 1991),
group (Hutchins, 1991), and organizational
(Cyert & March, 1963) levels of analysis (cf.
Miner & Mezias, 1996). Historically, this has
been problematic in terms of any attempt to
integrate the body of learning literature into
contemporary institutional theory, which is
conceptualized almost exclusively at the
level of the organizational field (DiMaggio &
Powell, 1983: 148).10 Recent developments in
both literatures, however, reflect movement
toward a meeting of the minds in terms of
level of analysis as institutional theory begins
to reassess its focus on the organizational
field and allow for the prospect of individual
actor agency (change driven from below),
while learning theory begins to account for
change that occurs at the population level
(change driven from above). This (re-)emer-
gence of a more micro-perspective within
institutional theory,11 combined with the
emergence of a more macro-perspective
within the learning theories, has resulted in
greater overlap between the two areas and,
thus, increased the potential for compari-
son.12 For the purposes of this chapter, there-
fore, we intend to focus on those areas of
organizational learning that have something
to say to institutional theory, especially insti-
tutional change, at the field (a.k.a. population,
interorganizational, community, industry)
level of analysis (Anderson, 1999; Haunschild
& Miner, 1997; Miner & Anderson, 1999).
Levitt and March (1988) theorize about
learning at this macro-level in their discus-
sions of vicarious learning among organi-
zations and ecologies of learning. Miner
and Haunschild (1995: 118) build on this
work by defining population-level learning
as a ‘systematic change in the nature and
mix of organizational action routines in a
population of organizations, arising from
experience.’
We contend that reconciling this distinc-
tion between levels of analyses in learning
and institutional theories, while attending to
the growing overlap between the two, is
important for advancing both theories, in
general, and for advancing our understanding
of institutional change, in particular. In addi-
tion to levels of analysis, another difference
between the two theories lies in their
approach towards change.
Processes of change
In addition to differences in the key assump-
tions of institutional and learning theories
 INSTITUTIONAL-LEVEL LEARNING: LEARNING AS A SOURCE OF INSTITUTIONAL CHANGE
concerning levels of analysis, both theories
have also differed in their understanding of
how change occurs.
A key part of the argument against the
ability of organizations to adapt to change
via learning (Cyert & March, 1963) can be
found in arguments made in support of pop-
ulation ecology – that firms are inherently
inertial and find it difficult to adapt substan-
tially to changes in their environment
(Hannan & Freeman, 1984). As firms survive
longer, their competitive advantage/routines
become entrenched and outdated, and any
innovation that occurs is more likely to be
incremental and travel ‘along existing tech-
nological trajectories’ (Sorensen & Stuart,
2000: 83). This inertia results in a focus on
the refinement of existing processes and,
thus, contributes to their institutionalization
by making firms less able to instigate radical
leaps in technology or other major changes in
firm strategies, structures, or processes.
These assumptions of inertia featured promi-
nently in early statements of neoinstitutional
theory where change, if it occurred at all,
happened in punctuated leaps (DiMaggio &
Powell, 1983; DiMaggio & Powell, 1991:
9–11), rather than incremental adaptation
(Kraatz & Zajac, 1996; Selznick, 1948,
1957). The distinction in these positions
speaks largely to the debate between old and
new institutional theorists (DiMaggio &
Powell, 1991; Greenwood & Hinings, 1996;
Hirsch & Lounsbury, 1997; Scott, 1987;
Selznick, 1996; Stinchcombe, 1997) and is
still contested. In contrast, however, learning
theories have consistently assumed that
change occurs in an incremental fashion as
actors learn from their own experience or the
experience of others and adapt accordingly
(Huber, 1991; March, 1991; March & Olsen,
1976; Miner & Haunschild, 1995).
We believe that it is important to appreciate
these differences in fundamental assumptions
regarding change (in addition to reconciling
differences in terms of levels of analysis) in
any attempt to compare institutional and
learning theories. As such, we now turn to a
review of recent developments in institutional
629
theory that have expanded its scope to incorpo-
rate the idea of institutional change, in general,
and individual actor agency as the source of
such change, in particular. In introducing this
broader perspective, contemporary institu-
tional theory has moved closer to the learning
view of the world and, in the process, estab-
lished itself on a firmer theoretical footing.
INSTITUTIONAL THEORY
AND CHANGE
Institutional theory places socially con-
structed beliefs, norms, and rules at the
center of organizational routines and struc-
tures (Berger & Luckmann, 1967; Meyer &
Rowan, 1977; Scott, 2001; Zucker, 1977). As
outlined by DiMaggio and Powell (1983),
agents for the diffusion and dissemination of
these cultural beliefs, models, and schema
include the state and the professions. Such
agents act to influence organizations via
coercive pressures through government regu-
lations, normative pressures through profes-
sional associations, and mimetic actions
resulting from cultural-cognitive processes,
such as taken-for-granted meanings and
schema. Over time, these pressures result in
practices that diffuse through a population
and converge around an institutional norm
(Baron, Dobbin, & Jennings, 1986;
Greenwood & Hinings, 1996; Strang &
Meyer, 1994). Institutional theorists believe
that the reason for this convergence is that
actions by firms that conform to institutional
expectations help these firms maintain suffi-
cient legitimacy to prosper and survive
in the long term (Baum & Oliver, 1992;
Galaskiewicz, 1985; Parsons, 1956; Pfeffer
& Salancik, 1978; Suchman, 1995).
Institutional theorists have found that the
longer an organization waits during the diffu-
sion process before adopting a business idea
or practice, the more likely the reason
for eventual adoption is a desire for conform-
ity and legitimacy by that firm (Tolbert
& Zucker, 1983; Westphal et al., 1997),
630 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
irrespective of the efficiency benefits (or
even harm) that adoption might cause (Davis,
Diekmann, & Tinsley, 1994; Rao, Greve, &
Davis, 2001; Zajac & Westphal, 2004).
Although early iterations of neoinstitu-
tional theory stressed the constraining influ-
ence of institutions on individual actors
(DiMaggio & Powell, 1983; Meyer &
Rowan, 1977; Zucker, 1977), however, more
recent developments in the field allow for
a greater interplay between constraints and
proactive, strategic actions by actors who
instigate change. During this process, two
areas of thought have evolved within institu-
tional theory around the notion of change:
The first concerns the general concept that
institutions can change, while the second
concerns the sources of that change and con-
ditions under which it occurs. In the follow-
ing sections, we briefly review this work.
This review is central to our task because
learning theory’s main contribution to insti-
tutional theory is as an additional (and unex-
plored) source of both endogenous and
exogenous change. We, therefore, first dis-
cuss how institutional theory views change in
general, and then discuss the various exoge-
nous and endogenous sources of change.
We finish by noting how learning theories
significantly expand our understanding in
both these respects.
Institutional change
The process of institutionalization is a cycle –
institutions emerge, diffuse, change, die, and
are replaced by new institutions (Hinings,
Greenwood, Reay, & Suddaby, 2004; Scott,
2001: Ch. 8). This idea was evident in the
foundations on which contemporary institu-
tional theory was built, but it was seemingly
ignored in early theoretical statements
(DiMaggio & Powell, 1983; Meyer &
Rowan, 1977). Berger and Luckmann (1967),
for example, discuss the notion of the
‘change of institutions’ (1967: 88) and
‘deinstitutionalization’ (1967: 81) as well as
consider at length the potential for conflict
between competing institutions (1967: 63,
85). In particular, they talk of the conflict that
occurs between an individual’s ‘primary’ and
‘secondary’ internalization of competing,
objective institutions – an integral aspect
of socialization. Since Berger and
Luckmann, many researchers have identified
and empirically documented various
instances of institutional change (Dacin
et al., 2002). For example, researchers
have investigated change in areas of work-
place routines and practices (Baron et al.,
1986; Mezias, 1990), forms and struc-
tures (D’Aunno, Succi, & Alexander, 2000;
Davis et al., 1994; Greenwood & Hinings,
1993; Greenwood & Suddaby, 2006; Kraatz
& Zajac, 1996), industry standards
(Ahmadjian & Robinson, 2001; Leblebici,
Salancik, Copay, & King, 1991), and institu-
tional logics (Hirsch, 1986; Thornton &
Ocasio, 1999).
Consistent with this idea of change,
Friedland and Alford (1991: 232) contend
that it is the potential conflict among compet-
ing institutions that produces the ‘multiple
logics’ from which individuals and organiza-
tions select (see also Scott, 1991). And,
closely combined with the notion that institu-
tions change as a result of competition, is the
implicit idea that institutional environments
change when one institution replaces another
(Greenwood & Suddaby, 2006; Hirsch, 1986;
Thornton & Ocasio, 1999). Once the concept
of institutional change is accepted, then the
idea of deinstitutionalization – that in order
to be replaced, an existing institution has to
diminish in influence – is not far behind
(Abrahamson & Fairchild, 1999; Barley
& Kunda, 1992; Burns & Wholey, 1993;
Davis et al., 1994; Leblebici et al., 1991;
Oliver, 1992).
The combined effects of this evolving area
of research is to overcome early interpreta-
tions of neoinstitutional theory that spoke to
the permanence of institutions once formed
(Scott, 2001: 109–110), as well as to high-
light the necessity for institutions to be
consistently reinforced if they are to be
preserved – what Berger and Luckmann
 INSTITUTIONAL-LEVEL LEARNING: LEARNING AS A SOURCE OF INSTITUTIONAL CHANGE
(1967: 54) term ‘reciprocal typification.’
It is these preserved and reinforced ‘taken-
for-granted routines’ that Berger and
Luckmann (1967: 57) assert form such a cen-
tral role in establishing and maintaining
social order.
Although there is consensus within the
institutional literature today that change
occurs due to competition among institu-
tions (Dacin et al., 2002), there is less agree-
ment on whether such change is adaptive
due to the flexibility of organizations/institu-
tions (Kraatz & Zajac, 1996; Selznick, 1948;
Selznick, 1957) or, instead, punctuated due
to the inertia generated as a result of institu-
tional isomorphism (DiMaggio & Powell,
1983; DiMaggio & Powell, 1991: 9-11;
Greenwood & Hinings, 1996). In addition,
there is disagreement about whether the
driving force behind change emerges from
forces at the environmental (exogenous)
or at the individual actor (endogenous) level
(Mezias, 1990). As noted above, the distinc-
tion in these positions concerning the
sources of institutional change speaks
largely to the debate between old and
new institutional theorists (DiMaggio &
Powell, 1991; Greenwood & Hinings, 1996;
Hirsch & Lounsbury, 1997; Scott, 1987;
Selznick, 1996; Stinchcombe, 1997)
and remains a point of contention within
the field.
Sources of institutional change
While it is universally accepted that environ-
ments, to varying degrees, influence organi-
zations (Meyer & Scott, 1983; Scott &
Meyer, 1994; Thompson, 1967), it is less
clear to what extent individual actors (i.e.,
organizations) are able to influence the
institutional makeup of the environments in
which they operate. This debate between
exogenous and endogenous sources of insti-
tutional change is one that has featured
strongly within the neoinstitutional literature
since its origin (Meyer & Rowan, 1977;
Zucker, 1977).
631
Exogenous sources of change
There are three exogenous conditions that
have been discussed broadly within the
literature as necessary (in part or combina-
tion) for change to occur: the influence of
institutional and technical forces in the envi-
ronment; a state of incomplete institutional-
ization (the absence of a dominant logic) and
other contextual factors; and an exogenous
shock that significantly alters the firm’s
environment.
(a) Institutional/technical forces In institu-
tional theory, researchers have identified
both institutional and technical forces as
sources of change, but different forces have
predominated in various iterations at differ-
ent times. Neoinstitutionalism presents a
view of the organization that is active and
conscious, but also represents a rejection of
the rational- and efficiency-based theories
that grew in prominence within organization
theory during the 1960s and early 1970s
(Kraatz & Zajac, 1996). DiMaggio and
Powell (1991: 3) state starkly that neoinstitu-
tional theory represents an attempt ‘to
replace rational theories of technical contin-
gency or strategic choice with alternative
models that are more consistent with the
organizational reality that researchers have
observed.’ As such, early iterations of neoin-
stitutional theory perceived institutional
forces as acting at the level of the field, con-
straining organizational behavior. Firms were
deemed to adopt specific business practices,
especially those acting later in the diffusion
of an innovation, in search of institutional
and societal legitimation, rather than any
technical benefits the specific practice might
generate for the firm (DiMaggio & Powell,
1983; Meyer & Rowan, 1977), which were
either not considered or deemed to be
insignificant (Westphal et al., 1997; Zajac &
Westphal, 2004).
Since the early iterations of neoinstitu-
tional theory, however, many key researchers
have emerged to correct this stark contrast
between the influence of institutional and
technical environments (Meyer, Scott, &
Deal, 1983: 61–64; Powell, 1991: 183–186;
632 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Scott, 1983: 159–160; Scott, 1991:
167–169). A shift in thinking that presented
the two states as extremes on a spectrum
along which different environments contain
different mixes of the two was the first step
on this journey (Scott, 1991). Kraatz and
Zajac (1996: 832) then went further, showing
that organizations are able to adapt their
structures to technical pressures in the envi-
ronment and benefit from change, even to the
extent that such change challenges taken-for-
granted institutions within the organizational
field. More recently, researchers have begun
to question more directly the artificial
dichotomy of economic and institutional
actors (Fiss & Kennedy, 2006; Lounsbury,
2007), suggesting that institutional theory
has yet to develop a comprehensive under-
standing of the complex motivations that
drive firm adoption behavior.
(b) Incomplete institutionalization and other
contextual factors Institutional theorists
have also framed the environmental hetero-
geneity that results from incomplete
institutionalization in terms of competing,
complementary, and conflicting logics that
create a second condition under which
change can occur. D’Aunno, Succi, and
Alexander (2000: 680), for example, demon-
strate that, in specific circumstances, diver-
gent organizational change follows ‘varying
market and institutional changes’ within
fragmented organizational fields.
In spite of this work, however, a tension in
the literature remains regarding other general
conditions that can facilitate change. While it
is accepted within institutional theory that
change driven by institutional entrepreneurs
is likely to occur in emerging (Maguire,
Hardy, & Lawrence, 2004) and fragmented
(D’Aunno et al., 2000; Seo & Creed, 2002)
fields, hierarchical fields, where dominant
actors have vested interests in maintaining
the status quo, are cited as less likely to expe-
rience such change. On this point, however,
the literature offers contradictory evidence.
One stream of empirical studies suggests that
marginal actors are more likely to act as
institutional entrepreneurs (Ingram & Rao,
2004; Leblebici et al., 1991) and bring
change to fields. The necessary conditions
under which such change is expected to
occur include high levels of existing legiti-
macy (Zimmerman & Zeitz, 2002), estab-
lished authority (DiMaggio, 1988), and
social capital (Maguire et al., 2004).
Common sense tells us, however, that the
more marginal the actor, the lower their level
of legitimacy, formal authority, and social
capital is likely to be, which would imply a
relative ineffectiveness as an agent of
change. This apparent contradiction has been
identified by another stream of research that
notes the key conditions necessary for the
emergence of institutional change and entre-
preneurial action by actors firmly embedded
within mature organizational fields.
Although a number of studies in the late
1980s and early 1990s identified that central
actors can act as instigators of institutional
change (Baron et al., 1986; Davis, 1991;
Fligstein, 1985; Palmer, Jennings, & Zhou,
1993), however, it is only recently that this
issue has been revisited and built upon
(Greenwood & Suddaby, 2006; Rao, Monin,
& Durand, 2005). This confusion regarding
the characteristics of those actors most likely
to instigate change requires further empirical
clarification if we are to have a better under-
standing of whether it is more central or
more peripheral actors who are more likely
to act as ‘institutional entrepreneurs’
(DiMaggio, 1988: 14). Perhaps one possible
solution is to distinguish between an entre-
preneur, who is more likely to be a periph-
eral player, and entrepreneurial action,
which can be performed by anyone (given
the appropriate conditions), including more
established and central actors?13
(c) Environmental shocks Finally, a third
source of potential change in an organiza-
tional field comes from dramatic shifts in
environmental conditions. If environments
are dynamic, the possibility of radical change
increases (Meyer & Scott, 1983; Scott &
Meyer, 1994). ‘Environmental jolts’
(Greenwood, Suddaby, & Hinings, 2002;
Meyer, 1982) come in many forms (such as
 INSTITUTIONAL-LEVEL LEARNING: LEARNING AS A SOURCE OF INSTITUTIONAL CHANGE
shifts in technology, regulatory change, or
sudden resource scarcity) and stimulate the
opportunity for change by opening the door
for new entrants (Thornton, 2002; Thornton
& Ocasio, 1999), accepted norms (Hirsch,
1986), organizational forms (Davis et al.,
1994; Greenwood & Suddaby, 2006), and
population-wide shifts in operating practices
(Baum & Oliver, 1992).
In the process of identifying the various
exogenous sources of potential change out-
lined in this section, however, institutional
theorists also broadened their search to
include endogenous factors – first discussing
strategic (Oliver, 1991) and then adaptive
(Kraatz & Zajac, 1996) elements of change
that emerge at the level of the individual actor.
Endogenous sources of change
Building on the exogenous sources of change
outlined above, institutional theory has also
begun to recognize the importance of indi-
vidual actors (organizations) as sources of
institutional change. DiMaggio (1988: 12),
Powell (1991: 194–200), DiMaggio and
Powell (1991: 22–27), and Leblebici et al.
(1991: 335–338) all noted that limiting
explanations of change within institutional
theory to exogenous sources alone limits the
theory merely to explaining the diffusion and
reproduction of institutional practices.
Endogenous explanations of interest, agency,
and institutional entrepreneurship, however,
help constitute institutionalism as a more
complete theory of organizations, releasing
the ‘full power of the institutional perspec-
tive’ (Powell, 1991: 183). Such ideas have
since become central to the contemporary
institutional literature.
(a) Interest, agency, and institutional entrepre-
neurship DiMaggio (1988: 14) first intro-
duced the term ‘institutional entrepreneur’ as
part of his call for institutional theory to
include a more complete explanation of indi-
vidual interests and agency. Institutional
entrepreneurs are agents who deploy the
resources at their disposal to create, alter, and
empower institutions. Such actors serve as
agents of legitimacy who support the
633
creation of new institutions and reform exist-
ing institutions in ways that they deem to be
appropriate and aligned with their interests.
These agents have the resources and, hence,
the power to shape the character of institu-
tions and enact institutional change (Dacin
et al., 2002: 47).14 Scott (2001: 74–77)
discusses the concept of agency in terms of a
firm’s ability to influence the institutional
logics that constitute its environment.
Following DiMaggio’s (1988) lead, this
proactive perspective diffused throughout
institutional theory as institutions were seen
as providers of the framework within which
actors are able to define and pursue their
interests (Leblebici et al., 1991; Oliver,
1991). Powell (1991), in particular, sought
to identify variation in firm responses to
institutional forces, as well as the organiza-
tional heterogeneity and institutional change
that such varied responses generate.
Oliver (1991: 151) made a crucial contri-
bution to this debate, noting five specific
strategic responses that are employed by
organizations in response to institutional
pressures. Each response varies in the degree
of ‘active agency’ employed by the firm:
acquiescing, compromising, avoiding, defy-
ing, and manipulating. Several researchers
have since utilized this framework to look at
the implementation of these various strate-
gies within fields (Covaleski & Dirsmith,
1988; Elsbach & Sutton, 1992; Westphal &
Zajac, 1994), thus expanding our knowledge
of agency within different empirical contexts
(Davis et al., 1994; Leblebici et al., 1991;
Zucker, 1991).
Many of these researchers, however, were
focused on endogenous sources of institu-
tional change that are internal to the firm. As
noted earlier, our primary focus in this chap-
ter is on change at the level of the field.
While such change may occur as a result of
endogenous change by a subset of population
members, it may also occur as a result of
endogenous processes at the level of the
field. There is some (though not a lot) of
work that examines the role of endogenous
field-level processes instigating field-level
634 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
change (Hinings et al., 2004). Fligstein
(1990), for example, notes the rise of the
finance conception of control with the spread
of financially trained professionals among
organizations. These professionals brought a
set of values and beliefs to their work that, as
they diffused within the population of large
industrial firms in the U.S., transformed the
view of control from the notion of the firm as
a single entity, to one of the firm as a bundle
of assets to be bought and sold. Others have
also noted the importance of professionals,
marginal players, and reform agents as
sources of endogenous change in institu-
tional fields (Greenwood & Suddaby, 2006;
Strang & Sine, 2002). Empirically, Brint and
Karabel (1991) and Miner, Haunschild and
Schwab (2003) identify specific, endogenous
field-level processes that induce change,
including the presence of an industry struc-
ture that rewards winner take all models
and imperfect inter-firm copying of routines
(Miner et al., 2003).
(b) The paradox of embedded agency An
analysis of endogenous sources of change,
however, brings into focus a central debate
within institutional theory concerning the
paradox of embedded agency (DiMaggio &
Powell, 1991; Greenwood & Suddaby, 2006;
Leblebici et al., 1991; Seo & Creed, 2002).
Institutional theorists who advocate the
notion of agency as a source of institutional
change face an inherent paradox – if institu-
tions and institutional logics form the social
environment, which, in turn, shapes our per-
ceived reality (Berger & Luckmann, 1967)
that is structured at the level of the organiza-
tional field (Giddens, 1984), then how do
entrepreneurs perceive the need to instigate
change and put their plan into action?
This contradiction has come to be known
within institutional theory as the paradox of
embedded agency, or, what Berger and
Luckmann (1967: 13) refer to as ‘somewhat
like trying to push a bus in which one is
riding.’ Although perplexing if thought
through to the extreme, this paradox is par-
tially neutralized by adopting the perspective
of multiple, coexisting institutional logics
(Friedland & Alford, 1991; Scott, 1991) from
which individual actors select (Greenwood &
Suddaby, 2006; Hirsch, 1986; Suddaby &
Greenwood, 2005; Thornton & Ocasio,
1999).15 Contemporary institutional theorists
believe, therefore, that firms are not always
passive recipients of institutional forces, but
have the strategic potential both to select
from, and also to influence and change, the
institutional logics that are prevalent in their
environment when it is in their best interests
to do so (Oliver, 1991).
This development, theoretically, brings us
full circle within institutional theory. By rec-
ognizing that, under the right circumstances,
actors have strategic alternatives that allow
them to break the bonds of their institutional
constraints, the paradox of embedded agency
dissolves (Seo & Creed, 2002); moreover, the
sociological foundations of the theory again
become apparent. Yet, institutional theory still
has far to go in terms of a complete theoreti-
cal understanding of the endogenous mecha-
nisms of change. There are many more
sources of change than agency or other delib-
erate processes of institutional entrepreneur-
ship. We contend that the learning theories
are a fruitful place for institutional theorists to
discover such sources and processes.
INSTITUTIONAL LEVEL
LEARNING: A NEW SOURCE
OF CHANGE
Below we review six key areas of inquiry
within learning theory – areas that, we
believe, have received little attention within
institutional theory, yet have strong implica-
tions for helping to understand and explain
the nature of institutional change. Our key
argument is that agency and other deliberate
processes of institutional entrepreneurship
are not the only sources of change in institu-
tional fields and that there is a vast and rele-
vant body of research in organizational
learning that can provide institutional theo-
rists with a much broader perspective on
 INSTITUTIONAL-LEVEL LEARNING: LEARNING AS A SOURCE OF INSTITUTIONAL CHANGE
change. For example, the role of unplanned
change resulting from the enactment of pro-
saic routines, local and boundedly rational
action, and ad hoc decision-making
processes (March, 1981) can all result in
shifts in institutions and institutional fields.
Very little attention has been given within the
institutional literature, however, to processes
of change resulting from these types of unin-
tended consequences. In the following sec-
tions, we will discuss how these components
of learning theories can inform our under-
standing of institutional change.
Organization theorists have long recog-
nized the importance of environmental influ-
ence on organizational structure and actions
(Meyer & Scott, 1983; Scott & Meyer, 1994).
It is also recognized that environments are
dynamic and unpredictable (Pfeffer &
Salancik, 1978; Thompson, 1967). The ability
of actors to respond to their environments –
with action that both shape and are shaped by
dominant institutions – is also gaining sup-
port within institutional theorists.16 Given the
dynamic and unpredictable nature of envi-
ronments, however, it would be strange if
actors were always able to retain control over
their actions as well as the subsequent conse-
quences of those actions. On the contrary,
firms that act in response to a complex envi-
ronment are often unable to react with uni-
fied goals, abilities, and intentions, let alone
control the outcomes of their actions (March,
1981: 573). The consequences of these reac-
tions, in other words, cannot always be
planned. In his path-breaking work in this
area, March (1981) presents the notion that
the stable and deliberate processes
of firm action can lead to unintended
change. This idea is well established in the
learning literature, but has received little
attention in the institutional literature;
although the work on actors’ interests
and agency (DiMaggio, 1988) and the
more recent scholarship on change in
general (Dacin et al., 2002) provide both a
solid foundation for such a discussion and
indicate a positive shift of thinking in this
direction.
635
Within this overarching framework at the
intersection of the learning and institutional
literatures, therefore, we offer the following
six areas in which advances made within the
learning literature can provide insight or
value to the field of institutional theory.
The role of unintended
consequences
As indicated above, a relatively under-
explored area of organization theory that is
relevant to institutional change is the notion
of the unintended consequences of deliberate
action. March (1981) notes how organiza-
tional action – even prosaic, everyday
actions, routines, and processes that relate an
organization to its environment – have the
potential to produce unintended conse-
quences in organizations and organizational
populations. Within neoinstitutional theory,
the institution has traditionally been the final
arbiter of organizational action. The idea that
institutional change might result from the
unplanned and unpredictable outcomes of
deliberate action is not addressed in any
depth in institutional theory. Nonetheless, we
see such action/consequence disjunctions
every day.
March (1981), for example, notes how
rational organizations with normal mobility
among managers will be more concerned
with the measurement of performance than
actual performance. This is especially true of
long-term performance. He further observes
how this preference can lead to actions
devoted to refining and managing perform-
ance measurement systems, rather than a
focus on the underlying actual performance.
At the field-level, this might lead to something
like the emergence of an approach to execu-
tive compensation that is measurement-ori-
ented, yet divorced from actual performance.
And, in fact, we see things like this in stock
option plans where the originally granted
strike price (the price at which executives are
able to buy the option) gets reset after the
price has declined. The frequency with which
636 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
this was done in the late 1990s suggests the
practice was institutionalized and had become
a widely accepted business norm – albeit one
that is now facing deinstitutionalization.17
As a second example of the unintended
consequences of everyday action, Denrell
(2003) notes that ordinary inter-firm learning
processes will lead to an under-sampling of
failure (as failed organizations and failed
individuals are excluded from the sample),
which then leads to the widespread accept-
ance of practices that are not actually related
to performance. For example, there seems
to be a widespread acceptance of the
idea that strong organizational cultures are
superior to weaker ones. Yet, this idea (which
has taken on a rule-like status in thought and
practice) is likely the result of an under-sam-
pling of failure, since the performance of
firms with strong cultures is likely to be
higher than the performance of those with
weaker cultures, even though strong culture
firms are also more likely to fail during peri-
ods of market change as their culture falls out
of step with changes in the environment.
The consequences of unintended
consequences for institutional theory
What are the implications of these types of
unintended consequences for institutional
theory? One implication is that institutions
will not automatically reproduce themselves.
Institutional theory has fruitfully explored
the idea of institutional reproduction
(Hinings et al., 2004; Scott, 2001). Yet, if we
allow for the prosaic role of unintended con-
sequences occurring in institutional fields,
change will develop as a matter of course and
institutions will not automatically reproduce.
Another implication of unintended conse-
quences is that it is not just agency that pro-
duces change in organizational fields. That
is, the deliberate actions and interests of indi-
viduals and organizations are not the only
driver of change in institutional norms, rules,
or other practices. The unintended outcomes
of everyday routines also generate change.
The examples outlined above show how
the unintended consequences of action
(e.g., concern over performance measure-
ment at the expense of actual performance)
have the potential to produce change in insti-
tutions (e.g., the acceptance of stock option
repricing as a ‘normal’ business activity).
The role of learning processes
and field-level change
A consideration of organizational learning
theory leads to additional potential mecha-
nisms by which endogenous change may
occur in organizational fields. Organizations
frequently show evidence of having learned
various routines, practices, and structures
from each other (Argote, Beckman, & Epple,
1990; Rogers, 1995). Some of this learning
occurs at the inter-firm level and some occurs
at the inter-population level, where industries
or other collective bodies learn from the
experiences of similar others (Miner &
Haunschild, 1995). When such learning
occurs, it reshapes the distribution of routines
in the population of firms and, thus, reshapes
the institutional context within which firms
operate. The processes through which this
inter-firm and inter-population learning occurs
include social connections, geographic prox-
imity, and other mechanisms of social com-
parison, such as size similarity (Rogers, 1995;
Strang & Soule, 1998). While reviewing all
these mechanisms is beyond the scope of this
chapter, they are all conceptually related to the
boundary between institutional and learning
theories, and all provide potential explana-
tions for institutional-level learning.
There is much evidence, for example, that
firms will learn from the experiences of
others to whom they are connected through
various networks – including interlocking
directorships, common social club member-
ships, and Business Roundtable connections
(Beckman & Haunschild, 2002; Davis &
Greve, 1997; Haunschild, 1993; Henisz &
Delios, 2002; Palmer et al., 1993; Westphal
& Zajac, 1994). This implies that institutional
change (especially endogenous change) can
occur along these interorganizational
 INSTITUTIONAL-LEVEL LEARNING: LEARNING AS A SOURCE OF INSTITUTIONAL CHANGE
pathways with the extent of change depend-
ent on the level of interconnectedness among
the organizations in a particular field.
Learning also tends to flow along geo-
graphic lines such that organizations in close
proximity tend to learn more from each other
than organizations that are more geographi-
cally distant (Burns & Wholey, 1993; Davis
& Greve, 1997; Marquis, 2003). This means
that institutional change is also more likely to
occur in geographic clusters by starting in
co-located firms and then spreading to more
distant ones (Greve, 2002).
The consequences of learning processes
for institutional theory
The implication of these learning processes
for institutional theory is that institutional
mechanisms and the spread of institutional-
ized practices may be affected significantly
by specific contextual factors for which insti-
tutional theory has failed to fully account –
factors such as geographic co-location, net-
work ties, and learning/information flows
between organizations and populations of
organizations.
In early versions of neoinstitutional theory
where the idea of mimetic isomorphism was
a central tenet (e.g., DiMaggio & Powell,
1983), the assumption was that such imita-
tion processes are relatively straightforward,
with one firm copying the practices of
another. Yet, learning theories have discussed
the problematic aspects of imitating others in
some detail (Levinthal, 2000; Miner &
Raghavan, 1999). Imagine, for example, the
problems inherent in an attempt to imitate
a Toyota production system (Levinthal,
2000). It is not clear which of the many
underlying routines, practices, and structures
employed by Toyota are good targets for imi-
tation. Is the uniform dress of management
important? What about the just-in-time
supply of materials?
While institutional theory has advanced
our knowledge of the isomorphic processes
that act as forces for field-wide convergence
over time, there is also the issue of imperfect
imitation (which results in divergent change).
637
Suppose that an organization is able to deci-
pher the core processes that deserve to be
imitated in the Toyota production system; its
attempts to imitate these systems will still be
affected by its own local context, the other
practices existing in its portfolio, the
responses of competitors to the imitation of
these practices, as well as a number of other
dynamic variables. These complications are
all a potential source of imperfect imitation –
where the practice is changed (for better
or worse, consciously or unconsciously) to
fit the local context, competitor responses,
and so on. Organizational learning studies
have noted such issues and the factors
that make them more or less likely
(e.g., Miner & Raghavan, 1999). Learning
studies also observe that such imperfections
increase the chances of divergent or hetero-
geneous outcomes (in other words, they are a
source of inconsistent change in the institu-
tional environment) in the sense that there is
now a greater variety of routines in the
population.18
The role of search: exploration
versus exploitation
The role of search in learning theory is cen-
tral to an understanding of population-level
shifts in routines, practices, and structures.
One key distinction in learning theory that
differentiates search from other firm strate-
gies is contained within the roles of explo-
ration and exploitation (March, 1991; Miner,
1994). Exploration involves search directed
toward new knowledge and competencies,
while exploitation involves search directed
toward the better utilization of existing com-
petencies. It has been noted that organiza-
tions will generally tend toward the
exploitation of existing competencies
(March, 1991; Starbuck, 1983), in part
because exploitation generates clear feed-
back and tends to yield positive, short-term
results (Levinthal & March, 1993). At the
field-level, this means that exploration will
tend to produce more dramatic and varied
638 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
change, while exploitation will tend to pro-
duce more incremental and localized change
(March, 1991). Thus, any factors that lead a
field toward a preponderance of exploration
are also likely to be associated with field-
level change in institutions. For example,
emerging fields such as the treatment of
HIV/AIDS patients in Canada (Maguire
et al., 2004) and government incentives for
new entrants in the green technology sector
(Sine, Haveman, & Tolbert, 2005) can be con-
sidered fields where exploration-driven
search processes led to field-level fragmenta-
tion that encouraged change (D’Aunno et al.,
2000). Other work has identified conditions
in well-established, more coherent fields like
the accountancy profession, and represents
examples of invested actors exploring
beyond established institutions in an attempt
to instigate change in an established organi-
zational form (Greenwood & Suddaby,
2006).
Yet, if we look at the learning literature,
there are additional factors likely to affect
institutional change, including problemistic
search and slow adaptation. We know from
the learning literature that performance that
does not meet aspirations triggers search and
learning (Cyert & March, 1963; Greve,
1998). We also know, however, that these
search processes for new knowledge and rou-
tines are more likely to result in riskier
approaches that, in turn, can pose greater
danger to firms (March, 1991). This means
that, at the field-level, a preponderance of
underperforming organizations will likely
lead to an increased acceptance of risk and
changes that produce greater variance in out-
comes. For example, the institutional forces
that lead to a preponderance of conglomerate
firms adopting the M-form structure are well
documented in research by Fligstein (1985;
1991) and Palmer, Jennings and Zhou
(1993). Yet, the use of such strategy/structure
combinations comes with corresponding
issues and, in general, firms that adopt insti-
tutional structures can end up underperform-
ing in comparison to those that did not
(Davis et al., 1994). Some of these firms
died, some switched to a different structure
through the process of divestiture of under-
performing assets, but some firms continued
to underperform until a new wave of de-
conglomeration activities occurred at a later
period. Thus, the institutionalization of an
organizational form resulted in underperfor-
mance, which then triggered learning
processes, which led to institutional change – a
shift from conglomeration to de-conglomera-
tion as an accepted form of doing business
(Davis et al., 1994).
Another factor that seems to lead to a pre-
ponderance of exploration (riskier change
resulting in greater leaps of innovation) is
slow adaptation (Denrell & March, 2001).
Slow adaptation benefits an organization
because it encourages the incorporation of
new and divergent ideas (March, 1991). Fast
learning, on the other hand, tends to drive out
alternatives, narrowing the body of knowl-
edge within the organization, which limits
the available options and encourages more
conservative exploitation in the system. The
implication is that systems of fast adaptation
will tend to exhibit more exploitative behav-
ior, even in situations where the long-run
implications of exploration are positive.
Fads, for example, which tend to be adopted
quickly, are less likely to be altered in sub-
stantial ways by the firms adopting them.
A slowly adopted field-level change,
however, such as the finance conception
of control (Fligstein, 1990), is a practice
that might engender more exploratory
processes and, consequently, result in greater
change during the adaptation process. This
argument presents an alternative explanation
to institutional persistence, but one that is
related to timing (overly fast versus
beneficially slow adaptation), rather than
taken-for-granted assumptions and
isomorphic processes. The important impli-
cation for this argument is that institutional
change is more likely to occur with slow,
rather than fast, field-level adaptation. Future
research could explore profitably these
differential processes as a function of
adaptation rate.
 INSTITUTIONAL-LEVEL LEARNING: LEARNING AS A SOURCE OF INSTITUTIONAL CHANGE
The consequences of exploration/
exploitation for institutional theory
It is well-established within institutional
theory that new ideas and business practices
diffuse among firms within organizational
fields at different times, for different reasons
(Baum & Rowley, 2002; Scott, 2001) and at
different rates (Argote, 1999; Tolbert &
Zucker, 1983). Some practices diffuse
quickly, whereas others do so more slowly. In
addition, some firms are early adopters,
while some are later adopters. Institutional
theory has explored this latter distinction
(early versus late), but has yet to discuss the
implications of fast versus slow adoption/
adaptation.
In addition, institutional theory has largely
limited its focus to adoption in response to
coercive, normative, or mimetic isomorphic
forces (DiMaggio & Powell, 1983). The
adoption of a new practice due to the under-
performance or failure (Strang & Sine, 2002:
507) of the existing dominant institutional
practice (i.e., adoption due to efficiency rea-
soning) has generally only been considered
as a factor driving early adoption (c.f. Fiss &
Kennedy, 2006; Lounsbury, 2007). Later
adopters are considered to adopt not as a
result of underperformance, but rather as a
response to uncertainty and a desire for con-
formity as well as the social legitimacy that
comes with adopting highly institutionalized
practices (DiMaggio & Powell, 1983). Firms
at this stage often adopt reluctantly and with-
out customization because the practice has
become taken-for-granted (Rao et al., 2001;
Westphal et al., 1997). In doing so, later
adopting firms typically pay little heed to the
potential advantages or disadvantages of the
practice in relation to its best interests (Davis
et al., 1994; Zajac & Westphal, 2004). Thus,
considering the predictions of learning theo-
ries with respect to adoption behavior, the
concepts of exploration and exploitation can
provide a fuller picture of the various firm
actions at various points in the adoption/
adaptation process and, thus, afford a more
complete picture of institutional change in
various societal sectors.
639
The role of forgetting
(unlearning, disadoption and
deinstitutionalization)
As noted by DiMaggio (1988), we know rel-
atively little about incomplete institutional-
ization, and even less about why
institutionalized forms and practices fall into
disuse. Organizational learning theory, on the
other hand, has addressed the issue of
‘unlearning,’ as well as the disadoption or
‘negative diffusion’ (Rao et al., 2001: 509) of
organizational forms and routines. This
literature can contribute to institutional
theory in its quest to provide insight into
institutional change, in general, and deinsti-
tutionalization, in particular (Oliver, 1992).
In the learning curve tradition, there are
studies showing that organizations forget.
Various factors have been proposed to
explain forgetting or the depreciation of
knowledge, including asset shortages and
personnel turnover (Argote, 1999; Argote
et al., 1990). In addition, there appear to be
more permanent and transitory types of
memory in organizations, and the results of
empirical studies tend to find that transitory
memory is more subject to being forgotten
(Argote, 1999). It may also be the case that
more technologically sophisticated organiza-
tions have less forgetting than less sophisti-
cated organizations, in part because the
knowledge embedded in technology is more
stable than knowledge embedded in routines,
interactions, or other forms of human inter-
actions and, thus, more resistant to change.
This suggests that institutional fields in
technologically sophisticated areas (e.g., aero-
space) may have less forgetting and, thus,
will exhibit more institutional stability than
fields in less technologically sophisticated
areas (e.g., restaurants). Another implication
from the learning literature is that field-level
turnover of personnel is a source of forgetting
and, therefore, change in institutions. Ingram
and Simons (2002), for example, found no
evidence of depreciation over time in the prof-
itability of kibbutz agriculture, which Argote
(1999) suggests may be due to the fairly stable
640 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
membership that is typical of these organiza-
tions. The kibbutz is also relatively stable and
institutionalized as an organizational form. In
contrast, consider the substantial amount of
change that has occurred in hospitals and
healthcare over the past half century, as well
as the field-level turnover of personnel that
has accompanied this change (Scott, Ruef,
Mendel, & Caronna, 2000).
Another area of learning that might have
relevance for institutional theory is the work
on cycles of adoption and abandonment of
practices (Abrahamson & Fairchild, 1999;
Barley & Kunda, 1992; Burns & Wholey,
1993; Davis et al., 1994; Rao et al., 2001;
Strang & Macy, 2001). Strang and Macy
(2001) note that faddish cycles of adoption
and abandonment can occur in fields and that
the dynamics of fads are sustained, in part,
because modestly successful firms tend to
copy the practices of very successful firms
that are more likely to have satisficed in their
search for success (Abrahamson & Fairchild,
1999; Strang & Macy, 2001). This view of
the role played by satisficing in promoting
fads and by constraining the institutionaliza-
tion of practices provides a deeper under-
standing of the factors driving the
institutionalization process than currently
suggested by institutional theory.
The consequences of forgetting for
institutional theory
Work on organizational forgetting can con-
tribute to institutional theory in expanding
the mechanisms that drive deinstitutionaliz-
ing forces. Currently, deinstitutionalization is
seen as occurring due to the actions of out-
siders or institutional entrepreneurs. Instead,
the characteristics of the technologies
involved in the field (whether these technolo-
gies are producing good or modest returns),
the roles played by unlearning (disadoption
and/or forgetting) due to personnel turnover
and other factors, and the concept of satisfic-
ing can all play a role in instigating the
diminishment of established institutions, as
well as the rise of new institutions to replace
them and renew the dominant order.
The roles of selective and
inferential learning
In opposition to established theory within the
institutional literature (Rao et al., 2001;
Westphal et al., 1997), the learning literature
tells us that sometimes later adoption may
not be due to conformity pressures, but may
instead be caused by learning processes that
occur at the field-level. These processes are
selective and inferential, rather than mimetic.
Sine, Haveman, and Tolbert (2005), for
example, discuss learning by firms that
observed the earliest market entrants into
the unproven green technology sector (them-
selves prompted by government incentives),
before deciding themselves to enter. By
entering this sector later in the diffusion
curve, these firms were able to infer potential
efficiency benefits for themselves, based on
the combined experiences of earlier entrants.
Such performance-based imitation is not
done during a period of uncertainty (uncer-
tainty is reduced by the experiences of prior
firms), is not the implementation of a prac-
tice that is taken-for-granted within the
industry (the sector is not yet sufficiently
established for this to occur), but is a deci-
sion made, at least partially, for economic
and rational reasons. All of these criteria
resist easily categorizing the adopting firm as
responding to mimetic institutional forces
but, instead, seem to fit into a learning model
that is based on the experiences of others.19
There is also research that discusses how
entire fields learn from the experiences of
other fields. For example, Cho, Kim and
Rhee (1998) discuss how Korean firms
achieved success in semiconductors, despite
their late entry into this market, precisely
because they learned from the experiences of
the United States and Japanese semiconduc-
tor industries. Similarly, the Microelectron-
ics and Computer Consortium (MCC), the
first major electronics research consortium in
the U.S., is recognized as successful, in part,
because of its observation and imitation of
similar consortia in Japan (Aldrich & Sasaki,
1995; Miner & Haunschild, 1995).
 INSTITUTIONAL-LEVEL LEARNING: LEARNING AS A SOURCE OF INSTITUTIONAL CHANGE
As noted earlier, social ties and geographic
proximity are two factors likely to affect
endogenous institutional change. These fac-
tors may also affect exogenous change when
fields learn from the experience of other
fields. Miner and Haunschild (1995),
for example, examined how the existence of
strong inter-firm ties between small biotech
firms and large pharmaceutical firms in the
U.S. facilitated the learning and integration
by the pharmaceuticals of the successful
organizational routines and technologies
of the biotechs. Consequently, this is another
example of field-level change that was
facilitated by learning processes among
socially connected firms. The consideration
of this type of change is of noteworthy value
to institutional theory in its quest to explain
such instances of change.
The consequences of selective and
inferential learning for institutional theory
The potential benefits of selective and infer-
ential learning for institutional theory were
first highlighted by Miner and Haunschild
(1995: 126). As illustrated above, these two
processes describe the means by which firms
(or fields) either copy routines they believe
have been successful elsewhere (selective
copying) or use the experiences of other
organizations or fields as a natural experi-
ment, drawing conclusions and adapting the
processes to suit their specific circumstances
(inferential learning). If institutional theo-
rists are able to build a body of research that
successfully integrates and uses these con-
cepts, they will be filling a significant gap in
the institutional literature, which to date has
no explanation for late adoption based on an
efficiency rationale.
The role of heterogeneity
versus homogeneity
According to an institutional perspective of
organizations, firms facing similar institu-
tional environments experience isomorphic
forces that tend toward convergence in their
641
structures and activities over time (Baron
et al., 1986; Greenwood & Hinings, 1996;
Strang & Meyer, 1994). In one of the key for-
mulations of the theory, DiMaggio and
Powell (1983) discuss the very strong institu-
tional (as opposed to competitive) mecha-
nisms by which this convergence occurs:
coercive, mimetic, and normative isomor-
phism. It is increasingly accepted within
institutional theory, however, that different
strategic responses by firms to the same insti-
tutional stimuli can result in greater, rather
than less, field-level heterogeneity (Oliver,
1991; Powell, 1991).
Thus, it becomes important to distinguish
under what conditions firms converge in the
face of institutional pressures and when the
opposite result occurs. The organizational
learning literature has begun to specify
some of these conditions, in part because
learning theories are at least somewhat
concerned with sources of variance in rou-
tines, processes, and structures (Miner &
Haunschild, 1995), whereas the preponder-
ance of work within institutional theory has
focused more on sources of institutional
retention and replication. Learning theories
have specified three key field-level condi-
tions/processes that will tend to divergence
(and, thus, institutional change) rather than
convergence: imperfect copying; regulatory
pressures; and field-level competition.
Imperfect copying
The first key field-level process is mimetic
learning, in which the learning involves not
simple copying but, instead, imperfect copy-
ing or, at times, even doing something
entirely different. We noted earlier how
imperfect copying is a process by which
field-level change can occur. In addition to
imperfect copying, however, there is also
work on other experience-based responses
that might occur, including what has been
called non-mimetic learning. For example,
research shows that some conditions
produce action that, while informed by the
experiences of others, results in outcomes
that are unique to the focal firm (Greve &
642 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Taylor, 2000). When imitation results in
action that differs in this way, the result
is likely to be field-level heterogeneity
(Greve, 2005; Miner et al., 2003) and, there-
fore, a possible source of new institutions
and institutional change.
Regulatory pressures
The second key field-level change process
specified in the learning literature is the
result of regulatory pressures, which were
initially theorized by DiMaggio and Powell
(1983) to lead to convergence. More recently,
however, such pressures have been shown
also to produce divergence when firms
respond differentially (D’Aunno et al.,
2000). Examples in the learning literature
note the changes that can result from differ-
ential learning in response to regulation –
either learning from the experiences of other
firms (Sine et al., 2005), or learning from the
experience of one’s own firm (Haunschild &
Rhee, 2004). In addition, whole industries
can learn from the regulatory responses of
other industries. An example of this occurred
when the medical industry learned from the
airline industry in relation to regulatory pro-
cedures surrounding accidents, subsequently
installing similar regulation within hospitals
(Miner et al., 2003). Thus, learning from
another population in response to regulation
can also lead to change in the institutional
environment.
Competition
The third key field-level condition occurs in
industries that are highly competitive. In con-
trast to DiMaggio and Powell’s (1983:
149–150) argument that competitive forces
are one of two types of isomorphic tenden-
cies among firms and industries, learning
theorists have argued that, under specific
conditions, competition can generate hetero-
geneous outcomes (Miner et al., 2003).
Miner, Haunschild and Schwab (2003)
identify two conditions under which such
competitive heterogeneity might occur –
competition based on novelty and competi-
tion based on extreme values. The first of
these occurs in instances where there is ben-
efit to an actor in promoting novelty – in
other words, where it pays to be different.
Many arts-based organizations operate
within such industries. Such an extreme
incentive-based industry will encourage
established firms to innovate and also
encourage new entrants to the field, which
generates both field-level heterogeneity and
change. The second condition is likely to
occur when maximum performance is dis-
proportionately rewarded – in other words, in
a winner-takes-all environment. Such envi-
ronments encourage high-risk strategies that
tend to result in greater variance rather than
higher average performance (March, 1991),
which has a diversifying impact on the indus-
try as a whole.
The consequences of heterogeneity/
homogeneity for institutional theory
The implications of this body of work within
the learning theories for institutional theory
are significant, especially for those
researchers who have begun to consider how
variations in actor responses to the same
institutional environments can produce
greater heterogeneous, rather than homoge-
neous, outcomes (Oliver, 1991). Integrating
these three key field-level learning processes
(imperfect copying, regulatory pressures, and
competition) will add significant depth to
discussions in this area of work that are only
just beginning within institutional theory.
CONCLUSION
We have argued that both institutional and
learning theorists have considered the impor-
tant issue of change in organizational fields,
although largely in isolation from each other.
The purpose of this chapter has been to try
and open up a beneficial avenue of commu-
nication between the two theories, believing
that understanding the processes and conse-
quences of organizational and interorganiza-
tional learning can contribute significantly to
 INSTITUTIONAL-LEVEL LEARNING: LEARNING AS A SOURCE OF INSTITUTIONAL CHANGE
institutional theory in its quest to explain
institutional change. Our goal has been to
identify where these two literatures overlap,
so that knowledge is shared and replication is
avoided (wherever possible), in a way that
constitutes, we hope, a constructive addition
to the institutional literature.
To this end, we have identified areas where
we feel learning processes and mechanisms
can work in conjunction with our existing
knowledge of institutions to inform our
understanding of field-level change. These
processes and mechanisms include the idea
that ordinary organizational processes can
lead to unintended outcomes, which can then
lead to the disruption of existing institutions.
The processes also include the effect of
network ties, geographic location, and infor-
mation flows as sources of institutional
reproduction (and non-reproduction).
Furthermore, these mechanisms investigate
the idea that processes of exploration engen-
der dramatic institutional change and that
such processes are more likely to occur under
slow adaptation and underperformance in
relation to specific institutional norms, rules,
and models. They also include the idea that
forgetting may erode institutions, a situation
that is more likely in conditions such as high
personnel turnover. Finally, these processes
and mechanisms explore the idea that selec-
tive and inferential learning processes, both
within and across fields, produce institu-
tional change, as well as the view that hetero-
geneity produced by imperfect copying,
regulatory pressures, and competition based
on novelty or extreme values can lead to
institutional change.
This is an exciting time for institutional
theory. The relatively recent focus on change
opens up huge possibilities for understanding
how institutions adapt and what the conse-
quences of such adaptation might be. We
believe that the learning theories can supply
at least some of the answers that institutional
theorist seek. Yet, in spite of the potential ben-
efits, the intersection of these two theories has
received scant attention from scholars to date.
We hope that the consideration of learning
643
theory contained within this chapter has deep-
ened our understanding of what is possible
and begun to hint at a research agenda for
future work within institutional theory that
addresses some of the unanswered questions
generated at the boundary of these two impor-
tant organization theories.
ACKNOWLEDGEMENTS
Much of this chapter was drafted during the
first author’s residency at the Rockefeller
Foundation’s Bellagio Center during May
2006. We thank Roy Suddaby, Matt Kraatz,
and an anonymous reviewer for their very
helpful comments and suggestions for
improvements in our arguments.
NOTES
1 Is Wal-Mart going green? CEO vows to be
‘good steward for the environment’ in announcing
goals,’ MSNBC.com, October 25, 2005, <www.msn
bc.msn.com/id/9815727/>.
2 Kris Hudson, ‘Wal-Mart Wants Suppliers,
Workers to Join Green Effort,’ Wall Street Journal,
February 2, 2007, pA14.
3 Jonathan Birchall, ‘Sun rises over Wal-Mart’s
power policy,’ Financial Times, January 22, 2007, p.8;
Melanie Warner, ‘Wal-Mart Eyes Organic Foods,’
New York Times, May 12, 2006, <www.common
dreams.org/headlines06/0512-07.htm>.
4 <www.walmart.com/>.
5 For examples, see: ‘Wal-Mart: The High Cost of
Low Price,’ <www.walmartmovie.com/>; and ‘Wal-
Mart Watch,’ <walmartwatch.com/>.
6 Melanie Warner, ‘Wal-Mart Eyes Organic Foods,’
New York Times, May 12, 2006, www.common
dreams.org/headlines06/0512-07.htm>.
7 Ann Zimmerman, ‘Wal-Mart Sees Profit in
Green—Some Recycling Initiatives Are Helping
Retailer’s Bottom Line,’ Wall Street Journal, August
21, 2006, p. B3.
8 We outline this concept in greater detail later
on in this chapter.
9 We do not take a stand here concerning the
debate within institutional theory between compet-
ing conceptualizations of institutions at the organiza-
tional (Selznick, 1957) or field (DiMaggio & Powell,
1983) levels. Instead, we perceive of an institution in
644 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
its broadest and most inclusive sense, utilizing
Jepperson’s (1991: 145) definition where ‘Institution
represents a social order or pattern that has attained
a certain state or property; institutionalization
denotes the process of such attainment.’
10 For a discussion of the multiple definitions of
an organization’s environment that have emerged
from the assumption of a field level of conceptualiza-
tion within the institutional literature over time,
see Scott (1983: 161–162) and Scott (1991:
172–174).
11 See the section titled ‘Institutional Theory and
Change’ later in this chapter.
12 There are also learning theories at lower levels
of analyses, however, that can be used to illuminate
institutional processes and we will incorporate these
theories as appropriate.
13 See the discussion below for an indication of
the role played by institutional entrepreneurs within
institutional theory as instigators of change.
14 For a comprehensive review see Leca,
Battilana, & Boxenbaum (2006).
15 Institutional logics are described as societal-
level ‘beliefs, norms, routine practices’ (Scott, 2001:
134).
16 See the section titled ‘Institutional Theory and
Change’ earlier in this chapter.
17 James Surowiecki, ‘The Dating Game,’ The
New Yorker, November 6, 2006, <www.new
yorker.com/archive/2006/11/06/061106ta_talk_suro
wiecki>.
18 The role of divergent versus convergent forces
for change is discussed in greater detail later in this
section.
19 Our initial example of Wal-Mart learning
from examples provided by earlier adopters of
environmentally-friendly policies is also of this nature.
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Social Movements and
Institutional Analysis
Marc Schneiberg and Michael Lounsbury
Calls for reintroducing agency, politics and
contestation into institutional analysis are now
legion, spanning nearly two decades since
DiMaggio’s (1988) classic piece, and gaining
new urgency as scholars struggle to explain
institutional emergence and change.
Institutionalists face persistent difficulties in
these tasks. Working from arguments about
isomorphism, diffusion, or path dependence,
they often invoke ad hoc explanations like
exogenous shocks in order to reconcile change
and path creation with theories that stress the
contextual sources of stability, continuity and
conformity (Greenwood & Hinings 1996;
Clemens & Cook 1999; Campbell 2004;
Streeck & Thelen 2005; Schneiberg 2005;
Guillén 2006). To address these difficulties,
institutionalists have begun to revise both their
conceptions of fields and their views of action.
From a structural standpoint, some scholars
increasingly view fields as comprising multi-
ple logics, or by indeterminacy, ambiguities or
contradictions, opening theoretical spaces for
action (Scott, Ruef, Mendel & Caronna 2000;
Stryker 1994, 2000; Seo & Creed 2002;
Schneiberg 2002, 2007; Lounsbury 2007;
Marquis & Lounsbury 2007). Focusing more
on agency, other scholars have brought new
27
attention to actors and what they do, produc-
ing studies of ‘institutional entrepreneurs’
(Beckert 1999; Hwang & Powell 2005;
McGuire Hardy & Lawrence 2004; Hardy &
McGuire, Chapter 7 this volume) and institu-
tional work (Lawrence and Suddaby 2006).
Within this milieu, scholars have also sought
to overcome ‘excessive institutional determin-
ism’ by turning to social movement theory and
the study of collective mobilization.
Spanning sociology and political science,
social movement theory has produced a
wealth of concepts and research on change,
including studies of students organizing to
register black voters in the 1960s (McAdam
1988), the mobilization of farmers, workers
and women to make claims on the state
(Clemens 1997), shareholder activism to
contest managerial control over corporations
(Davis & Thompson 1994), the growth of
identity movements pursuing peace, gay/les-
bian rights and environmentalism (e.g.,
Laraña, Johnston, & Gusfield 1994), and the
rise of transnational pressure groups (Keck &
Sikkink 1998). What these studies share is an
interest in contestation and collective mobi-
lization processes – how groups coalesce to
make claims for or against certain practices
 SOCIAL MOVEMENTS AND INSTITUTIONAL ANALYSIS
or actors in order to create or resist new insti-
tutional arrangements or transform existing
ones (McCarthy & Zald 1977). They also
share an interest in tracing how contestation
and collective action rest on the capacity of
groups to mobilize resources and recruit mem-
bers, their ability to engage in cultural entrepre-
neurship or frame issues to increase acceptance
of their claims, and the political opportunity
structures that constrain or enable mobilization
(McAdam, McCarthy, & Zald 1996). This
chapter focuses on how engaging collective
mobilization and social movement theory has
inspired new work in institutional analysis.
The integration of movements into institu-
tional analysis has begun to revise existing
imageries of institutional processes, actors,
and the structure of fields, generating new
leverage for explaining change and path
creation. Regarding processes, it adds con-
testation, collective action, framing and
self-conscious mobilization to conceptual
repertoires of legitimation, diffusion,
isomorphism and self-reproducing taken-
for-granted practices (Jepperson 1991;
Colyvas & Powell 2006). Regarding actors, it
counter-poses challengers and champions of
alternatives to standard accounts of states,
professions and other incumbents as key
players. Regarding structure, it moves away
from images of an isomorphic institutional
world of diffusion, path dependence and con-
formity toward conceptions of fields as sites
of contestation, organized around multiple
and competing logics and forms (Kraatz &
Block, Chapter 9 this volume).
As will be clear, work that integrates
movements into neo-institutionalism paral-
lels work on institutional entrepreneurship in
key respects (Hardy & McGuire, Chapter 7
this volume). Both emphasize agency, delib-
erate or strategic action, and self-conscious
mobilization around alternatives. Both wres-
tle with problems or paradoxes of how actors
embedded within institutions can change
those systems, how institutions limit or sup-
port change, and how actors draw on the
elements or contradictions of existing institu-
tions to forge new ones. Both identify some
651
of the same processes as critical for change,
including framing, theorization, transposi-
tion, and the recombination of logics. Yet
where institutional entrepreneurship research
often attributes substantial casual efficacy to
individuals, studies linking movements and
institutionalism are more deeply rooted in
structural perspectives. They thus place
greater emphasis on politics and collective
mobilization as motors of change, and more
systematically address the relations between
activity, collective organization and existing
institutional contexts.
Our central claim is that analyzing move-
ments within neo-institutional theory is
essential for understanding when and how:
(1) paths or fields become constituted around
multiple, competing logics; and (2) multiple
logics, contradictions and ambiguities fuel
field-level change and new path creation. In
making this claim, we accept, rather than dis-
miss, contextual arguments about durability,
path dependence, and stability that give insti-
tutionalism its analytical edge in explaining
continuity, differences or ‘higher order’
effects on organizations (Schneiberg &
Clemens 2006). Institutions often exhibit
increasing returns and positive feedbacks
(Pierson 2000). Actors empowered by exist-
ing institutions use their advantages to elabo-
rate institutions in ways that preserve their
power and preclude alternatives. Diffusion,
adoption and the resulting communities of
practice create isomorphic pressures that
make conformity a condition for legitimacy,
fueling further diffusion. Institutionalized
theories of order render alternatives unthink-
able, irrational or inefficient. And the preva-
lence of taken-for-granted understandings
means that even opposition occurs in those
terms, deepening the paths it contests.
In short, rather than simply assert an
agentic, actor-centered institutionalism, we
begin with the structural insight that limits on
alternatives and pressures for continuity
or convergence often exercise considerable
force. Reflexive action, the capacity to articu-
late alternatives, the salience of multiple
logics, or their translation into change, cannot
652 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
be assumed. To the contrary, these are often
fragile achievements which ultimately rest
on the emergence and efficacy of social
movements.
Using existing and ongoing research, this
chapter outlines analytical strategies for
addressing the rise and effects of movements
on institutional fields. We pay particular
attention to how those strategies revise exist-
ing institutional accounts of change and path
creation. In parts I and II, we consider move-
ments as agents and infrastructures of
change, outlining two emerging approaches
to what movements do and how they affect
fields. One treats movements as forces
against institutions; that is, as forces operat-
ing outside established channels to assert
new visions and disrupt or directly contest
existing arrangements, evoking legitimacy
crises, sense-making and other institutional
processes within fields. This approach
revises two canons in institutional theory –
the two-stage model of institutionalization
and histories of change as punctuated equi-
librium. It also provides insights into how
fields become constituted around multiple
logics.
A second approach considers the rise and
impact of movements within fields, examin-
ing movements as institutional forces or
infrastructures for institutional processes
including theorization, recombination and
diffusion. This approach reveals how diffu-
sion, translation and adoption are contested,
political processes that often depend on col-
lective action. It also sheds light on how
movements emerge from and exploit contra-
dictions or multiple logics within fields to
mobilize support, forge new paths or produce
change.
In part III, we turn from movements as
agents of change to analyses of how contexts
shape contestation and collective action.
Institutionalists have recognized that existing
institutions constrain and enable mobiliza-
tion, create openings for challengers, and
shape their capacities to produce change.
This has led neo-institutionalists to the move-
ments literature on political opportunity
structure and institutional mediation (e.g.,
Amenta, Caruthers, & Zylan 1992; McAdam
1999; Davis & Thompson 1994), prompting
new insights about opportunity structures, a
reinvigoration of multi-level approaches, and
new strategies for analyzing movements,
existing institutions and change. Taking a
decidedly cultural cast, these strategies
reformulate arguments about political oppor-
tunity structures as institutional opportunity
structures, highlighting how movements
and change are endogenously shaped by
institutions.
Based on these discussions, we turn in part
IV to suggest new directions for research on
how movements and institutional dynamics
combine to produce change. One key direc-
tion is methodological: to develop clearer,
more direct measures of movements and to
exploit the analytical leverage of multivariate
approaches. This will help assess and sys-
tematize claims from qualitative and histori-
cal work about movement effects and the
relations between movements, institutional
contexts and outcomes.
A second direction is to analyze move-
ments as a political condition for diffusion
and other institutional processes. Insofar as
alternatives are contested or suppressed by
vested interests, their diffusion will depend
on collective action and the mobilization of
power by champions of new practices and
forms. In cases like these, movements can
moderate institutional processes, supporting
diffusion or translation in three ways:
by serving as field-wide or cross-field mech-
anisms for mobilizing power, by working
as political forces within organizations
to increase their receptivity to alternatives,
or by working between organizations to
increase innovators’ influence as exemplars.
Taking this approach to how movements
operate in fields can help explain the diffu-
sion of alternatives and more diverse sets of
outcomes related to practice variation.
Finally, we consider the origins of move-
ments and institutions, taking an historical
approach and considering the relationship
between institutions and movements as an
 SOCIAL MOVEMENTS AND INSTITUTIONAL ANALYSIS
ongoing process in which combinations or
sequences of movements cumulatively pro-
duce change. Movements might figure in the
production of unintended and incremental
trajectories of change. That is, even when
they are defeated or their time has passed,
movements may leave legacies, elements of
institutional orders and bits and pieces of
paths not taken, producing diffuse but impor-
tant effects, and creating possibilities for sub-
sequent movements, institution-building and
transformation (Schneiberg 2007). Focusing
on these possibilities sheds further light on
how movements and their effects are endoge-
nously produced, helping researchers avoid
the trap of invoking movements, like exoge-
nous shocks, as a deus ex machina.
MOVEMENTS AGAINST
INSTITUTIONS: CHALLENGER/
DOMINANCE APPROACHES
One way to integrate movements into institu-
tional research preserves the analytical dis-
tinction between movements, contestation and
deliberate mobilization, on the one hand, and
institutional processes like the reproduction of
taken-for-granted practices, on the other,
taking movements as an ‘extra-institutional’
force for change or new path creation. This
approach hardly exhausts the possible rela-
tions between movements and institutions.
But it captures the potentially wide class of
cases where movements arise outside of or
on the peripheries of established fields,
acting as outsider-challengers to assert new
visions of order, disrupt existing systems, or
secure policies or representation from estab-
lished authorities. Thinking in these terms
also extends the institutional framework to
highlight key processes left exogenous by
existing accounts of emergence and change,
opening up the black-box of ‘pre-institutional’
dynamics, and adding new imageries and
mechanisms to our conceptual repertoire.
Consider two canonical formulations in
neo-institutional analysis. In the two-stage
653
model of institutionalization, the emergence
of new paths or fields is a ‘bottom up’ phe-
nomenon: (1) organizations or states adopt
structures or policies in response to local
problems, politics or characteristics, which
then spark (2) processes of mimesis, theo-
rization and diffusion, eventually crystalliz-
ing a broader community of practice around
a core set of principles or models (Tolbert &
Zucker 1983; Baron, Dobbin, & Jennings
1986; Galaskeiewz & Wasserman 1989;
Strang & Chang 1993). As solutions diffuse,
they become taken-for-granted as an
accepted norm, serving as baselines to which
organizations must subsequently conform as
a condition for legitimacy. In punctuated
equilibrium models, change occurs as a
sequence of shock, disruption, deinstitution-
alization, and reinstitutionalization (Edelman
1990, 2006; Fligstein 1990, 2001; Sutton
et al. 1994; Sutton & Dobbin 1996). Shocks
like new laws or court rulings subvert exist-
ing routines, vested interests and established
understandings, evoking uncertainty, sense-
making and a succession of players and
models as new groups emerge to define the
situation and establish their solutions as new
bases of order.
Both models shed light on key institutional
processes: (1) mutual monitoring, mimesis
and the diffusion or transposition of practices
across organizations; (2) theorization, codifi-
cation or the endorsement of best practices
by professional associations; and (3) inter-
ventions by states to ratify, redraw or reject
field boundaries and emerging solutions
(e.g., Strang & Meyer 1993). Yet both tend to
neglect the origins of new ideas and practices
as well as the sources of disruption, leaving
key players and processes unanalyzed.
However, in many canonical cases featuring
isomorphism, the instigating shocks or moti-
vations for adoption were the direct and
deliberate results of social movements –
municipal reformers and progressives fight-
ing corruption in city government, civil
rights activists demanding state intervention
to end discrimination, and agrarian populists
contesting corporate consolidation.
654 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Schneiberg and Soule’s (2005) study of
rate regulation in insurance develops one
model of the role of movements in the insti-
tutionalization process, filling in gaps in the
canonical accounts. It conceptualizes institu-
tions as political settlements. And it analyzes
path creation as a contested process
grounded in sequences of mobilization, dis-
ruption and conventional institutional
dynamics, tracing how mobilization outside
established channels catalyzes path creation
and change. Specifically, their study shows
how rate regulation by American states in the
early twentieth century was provoked neither
by exogenous shocks, nor by scattered and
unconnected politics or problem-solving
behavior. Rather, it was sparked by anti-cor-
porate movements, including the Grange and
Farmers Alliance who worked to contest cor-
porate consolidation and assert alternative
forms of economic order. This mobilization
was a response to the rise of ‘trusts’ and
‘combines’ in various sectors. Grangers and
other groups directly opposed ‘corporate
liberal’ models of order based on for-profit
corporations, national markets and unregu-
lated industry. Instead, they pursued ‘pro-
ducer republican’ logics that envisioned
American capitalism as a regionally decen-
tralized and cooperatively organized
economy of independent producers, farmers
and self-governing towns. Moreover,
in targeting insurance, Grangers and other
groups secured anti-compact laws to
break up the ‘insurance trust,’ organized con-
sumer-owned mutual firms, and otherwise
disrupted insurance markets, fueling legiti-
macy crises, public hearings, and new
interventions within key states.
These disruptions and interventions, in
turn, sparked politics and conventional insti-
tutional processes within the insurance field.
They evoked inter-state diffusion in which
key players monitored other states, theorized
rate regulation as a solution to the ‘insurance
problem,’ recombined elements to forge
those solutions and adopted laws passed by
other states. They also evoked supra-state or
field-wide process in which courts and the
professions endorsed regulation, promul-
gated model laws, and built field-wide
administrative organs. Taken together, these
institutional processes shifted the balance of
power within states, crystallizing insurance
around economic models and regulatory
solutions that settled political struggles over
industry governance (see also Schneiberg
1999, 2002; Schneiberg & Bartley 2001).
Rao, Clemens and Hoffman also go
beyond canonical accounts by foregrounding
movements, understanding paths as political
settlements, or analyzing path creation as
sequences of movements, mobilization and
institutional processes. Rao (1998) shows
how the consumer watchdog agencies and
product rating schemes that are now taken-
for-granted in the US emerged from con-
sumer mobilization and contestation over
whether scientific testing and the power of
informed consumers should be blended with
the role of labor, unionization and concerns
about production conditions. At first, con-
sumer groups fought for two different
logics of market reform, one that blended
consumer advocacy with unionism and one
that focused more narrowly on the consumer.
But broader political dynamics eliminated
the more comprehensive radical change
frame from the path, segregating ‘consumer’
and ‘worker,’ and ensuring the dominance of
a consumer-only impartial testing logic
(see Carruthers & Babb 1996 for a similar
analysis of monetary systems).
Clemens (1993, 1997) more directly
addresses how change flows from combina-
tions of movements and institutional
processes, tracing how interest group politics
became a core feature of the American polity
through successive waves of mobilization
and transposition by three outsider/chal-
lenger groups. Acting collectively to contest
parties and patronage, first unions, then
farmers, and then women’s groups built on
previous efforts to disrupt existing arrange-
ments (strikes, boycotts, protests) by trans-
posing fraternals, cooperatives, clubs and
other kinds of apolitical associations into
mainstream politics. These sequences of
 SOCIAL MOVEMENTS AND INSTITUTIONAL ANALYSIS
actions fundamentally altered the terms of
political representation and influence,
creating access and clout for previously dis-
enfranchised groups and institutionalizing
lobbying, legislative monitoring, and other
now taken-for-granted modes of American
politics.
Hoffman’s (1999) study of environmental-
ism likewise finds that movements and insti-
tutional dynamics play pivotal roles in field
creation and change. Here, conflicts over
competing institutions and successive rounds
of environmental mobilization, scandal and
legislative activity provoked new forms of
discourse, theorization, and new patterns of
interactions among firms, non-profits and
governments. These dynamics, in turn,
helped produce an increasingly structured
environmental field.
As a group, these studies substantially
revise canonical accounts of path creation
and change. First, they support a view of
institutions as settlements of political strug-
gles over the character of fields fueled by the
mobilization of challengers around compet-
ing projects and logics (Davis & Thompson
1994; Fligstein 1996, 2001; McAdam &
Scott 2005; Armstrong 2005). Emphasizing
contestation and collective action, this view
departs from ‘cooler’ imageries of paths as
based mainly in diffusion, taken-for-granted
practices, theorization and normative
endorsement by professions or states. Thus,
insurance rate regulation represented a polit-
ical solution of struggles between insurers,
who pursued economic logics of corpora-
tions, markets and unregulated industry
associations, and challenger groups, who
sought anti-trust laws, regulation and mutual
alternatives to promote decentralized and co-
operatively organized economies. Conflicts
over these visions yielded structural innova-
tions, but were not resolved until field
members crafted packages that combined
regulation with private association, and
mutuals with for-profit corporations. The
consumer advocacy field likewise reflected a
settlement of struggles and mobilization
around competing logics, albeit one which
655
involved a clear cut victory of one logic of
consumerism over other.
Second, these studies suggest an image of
the process of institutionalization as a
sequence or interaction between contestation
and mobilization around alternatives, on the
one hand, and more conventional institutional
dynamics, on the other. In insurance, chal-
lengers mobilized outside the system to contest
the ‘insurance combine’ and forcibly impose
alternative forms and anti-trust policies on the
industry. Regulators and reformers within the
field responded, in turn, by theorizing, endors-
ing and diffusing regulatory policies which
recombined multiple forms into new packages.
Multiple dynamics likewise figured in the case
of American state building, where farmers,
unions and women’s groups progressively
institutionalized modern interest group politics
in the US via successive waves of mobiliza-
tion, contestation and translation
Third, these studies provide a more varied
understanding of how movements fuel path
creation and change by mobilizing outside
established channels to contest extant sys-
tems. At a minimum, by introducing multiple
logics and promoting awareness of problems,
challenger movements subvert the taken-
for-grantedness of existing arrangements,
fueling legitimacy crises and institutional
politics (Stryker 2000), and providing insid-
ers with cultural resources for criticism,
reflexive action or ‘mindful deviation’
(Garud & Karnoe 2001). Thus, as anti-
corporate forces, consumers and women’s
groups took action and asserted new logics,
they not only evoked media attention and
public debate, creating openings for chal-
lengers and reformers to delegitimate domi-
nant institutional systems. They also supplied
experts, reformers and other groups with
models and cultural resources for criticizing
and revising extant paths such as by combining
or layering them with new forms and elements.
Moreover, challenger movements are often
carriers of new organizational forms, and can
work around or outside established channels
to build parallel, alternative systems of
organizations (Rao, Morrill & Zald 2000;
656 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Carroll & Swaminathan 2000; Schneiberg
2002; Schneiberg, King & Smith 2008).
These efforts may not be disruptive in intent.
Yet promoting alternative forms can foster
new competitive dynamics and populate
fields with instances of new logics. By trans-
lating apolitical forms of association into
state, agrarians, unions and women’s groups
altered both the terms of competition in
American politics and prevailing conceptions
of appropriate political action. By promul-
gating mutual insurance, Grangers and other
groups both instantiated cooperativism and
transformed the terms of economic competi-
tion in a key sector, forcing insurance corpo-
rations to engage in new forms of rivalry
based on prevention, re-reengineering and
loss reduction. And by introducing the sci-
ence-based, not-for-profit product testing
agency, the consumer movement transformed
the terms of trade throughout the economy.
Furthermore, challenger movements can
mobilize masses, networks and political sup-
port to pressure states and other power cen-
ters for new agencies, laws and policies that
ban or mandate practices. As scholars have
shown, the uncertainties or prohibitions asso-
ciated with new laws, agencies, and man-
dates can profoundly destabilize existing
systems, fueling sustained institutional
dynamics (Fligstein 1990; Edelman 1992;
Dobbin & Dowd 1997; Hoffman 1999).
Finally, outsider groups like ACT UP and
Earth First! can and do use protests, boycotts
and direct actions to dramatize problems and
directly disrupt daily operations and routines
(Elsbach & Sutton 1992; Hoffman 1999). In
all of these ways, movements can fuel path
creation and change as political-cultural
forces for contestation, confrontation and
disruption. Instantiating new logics, they can
evoke controversy and debate within fields,
conflicts and policy responses within organi-
zations, inter-organizational diffusion and
field-wide association, while supplying
insiders and reformers with templates, politi-
cal support and cultural resources for theo-
rization, transposition, recombination and
the assembly of new institutions.
Simple in its essentials, a conception that
emphasizes sequences of outsider movements,
mobilization and institutional processes has
supported increasingly sophisticated analyses
of path creation and change. As we show in
part III, a ‘movements against institutions’
conception lends itself readily to multi-level
analyses of fields, and to consideration of how
existing institutions or political opportunity
structures shape challengers’ capacities to
mobilize and effect change. Yet this concep-
tion does not exhaust the ways that move-
ments figure as agents of path creation and
change.
MOVEMENTS WITHIN INSTITUTIONS:
COLLECTIVE MOBILIZATION AS
INSTITUTIONAL PROCESS
Groups seeking change often mobilize col-
lectively outside established institutions to
assert new logics and disrupt taken-for-
granted arrangements. Yet institutionalists
have recognized movements also arise within
institutions or fields, mobilizing insiders as
well as outsiders, using established networks
and resources to diffuse alternative practices,
and drawing effectively on existing institu-
tional elements and models to craft new sys-
tems (see Fligstein 1996, 2001). Indeed,
while movements can drive change by
directly opposing existing schemes, generat-
ing legitimacy crises or otherwise disrupting
institutions, they sometimes promote path
creation and change incrementally by engag-
ing in institutional processes (or becoming
institutional forces). That is, movements can
emerge and operate within established chan-
nels and power structures, drawing on exist-
ing institutions and taken-for-granted
understandings to theorize, articulate and
combine new projects or practices with pre-
vailing models and arrangements. In so
doing, movements may themselves become
vehicles or established channels for diffu-
sion, theorization, recombination and other
institutional processes within fields.
 SOCIAL MOVEMENTS AND INSTITUTIONAL ANALYSIS
This broader conception of movements
risks a loss of analytical specificity and a
diminished focus on contesting power struc-
tures, especially where movements become
synonymous with collective or quasi-collec-
tive action geared toward any type of change
(Scully & Segal 2002; Scully & Creed 2005).
Yet analyzing movements as intra-institu-
tional forces productively blurs distinctions
between ‘extra-institutional’ and ‘institu-
tional,’ ‘mobilization’ and ‘self-reproducing’
process, or ‘contentious’ versus ‘conven-
tional’ politics. It has led to new insights
about parallels between institutional phe-
nomena and collective action processes stud-
ied by movement scholars (Campbell 2005;
Strang & Jung 2005; Davis & Zald 2005;
Wade, Swaminathan & Saxon 1998). It has
led to new understandings of the relations
between movements and institutions, includ-
ing how institutional reproduction and diffu-
sion depend on mobilization, political
resources and contestation (Thelen 2004;
Hargrave & Van de Ven 2006). It supports
research that goes beyond analyzing move-
ments as ‘extra-institutional’ producers of
multiple logics to consider also how move-
ments and contestation are products of – and
mobilize – contradictions and multiple
models within fields (Strkyer 2000; Seo &
Creed 2002; Morrill 2006). And it has let
institutionalists interested in movements sup-
plement images of change as disruption, con-
flict and settlement with analyses of how
movements also work in an incremental and
embedded fashion, producing trajectories
of path creation or change as reconfiguration,
recombination or layering (Clemens &
Cook 1999; Streeck & Thelen 2005;
Schneiberg 2007).
Lounsbury and colleagues’ studies of
recycling address how movements can
enter into and operate within fields as institu-
tional forces, emphasizing their role as
agents of theorization, classification, and
the diffusion of codified arguments or
frames (Lounsbury 2001, 2005: Lounsbury,
Ventresca, & Hirsch 2003). Initially,
eco-activists pursued recycling outside
657
established channels, working independently
of and against the waste industry to organize
thousands of local non-profit, drop-off
recycling centers. Such efforts were part of
a broader project to restructure capitalism.
They were articulated within a holistic
frame that theorized recycling as a way to
rebuild community, create local closed-loop
production and consumption, and reduce
community dependence on conglomerates
and capitalist commodity systems. Yet the
commitment of industry and state agencies to
a resource recovery logic which emphasized
landfill, waste-to-energy programs and
large-scale incineration left the recycling
movement isolated and its centers without
outlets for materials.
In fact, a viable infrastructure for recycling
did not emerge until activists, working
through the National Recycling Coalition,
entered mainstream policy negotiations,
forged ties with solid waste handlers, and
retheorized recycling as a for-profit service
that built on curbside programs and comple-
mented landfills and incineration. Coupled
with grass-roots mobilization against new
incinerators, and negotiations with state
agencies to buy recycled materials, theoriz-
ing recyclables as commodities transformed
cultural beliefs and discourse about waste in
the industry, creating institutional conditions
for diffusing recycling practices (see also
Strang & Meyer 1993; Strang & Soule 1998;
King, Cornwall, & Dahlin 2005).
In addition, environmental movements
also served as institutional forces by operat-
ing inside organizations (see Zald & Berger
1978 for an early statement on movements
within organizations). The Student
Environmental Action Coalition promoted
recycling within universities by codifying
arguments, building inter-collegiate net-
works and disseminating standardized argu-
ments and facts about similar programs
elsewhere. And the College and University
Recycling Coordinators provided universi-
ties and colleges with standards and classifi-
cation schemes for measuring the progress,
costs and benefits of programs, which helped
658 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
deepen discourse and theorization of recy-
cling as a rational economic activity. Thus, as
Greenwood, Suddaby and Hinings (2002)
document for professional associations,
social movements can create cultural and
theoretical foundations for new activities,
forms and fields (see also Moore 1996, and
Frickel & Gross 2005 for examples of move-
ments among scientific professionals). They
can operate within existing power structures
as agents of theorization, classification and
diffusion, and can themselves become infra-
structures for those processes within fields.
Indeed, as recycling became institutional-
ized, the movement itself blurred into profes-
sional associationalism. Activists became
recycling employees; employees used the
National Recycling Coalition to form a pro-
fessional association; and the association
forged new identities, statuses and proce-
dures for recycling managers within the
new field.
Research by Morrill, Creed, Scully,
and Moore on the institutionalization of
alternative dispute resolution, domestic
partner benefits, and public science,
likewise document how movements operate
as forces within mainstream institutions,
de-emphasizing confrontational tactics in
favor of their role as agents or vehicles
for recombination, assembly, translation
and diffusion. In Morrill’s (2006) study
of alternative dispute resolution (ADR),
mobilization for alternatives and contestation
themselves rested fundamentally on the
presence and recombination of multiple
logics of practice in the socio-legal field.
In this case, institutional processes of
bricolage, hybridization and innovation
preceded broader mobilization. Lawyers,
social workers, community activists
and judges working at the interstices or
overlaps between fields during the
1960s drew in an ad hoc fashion on ther-
apeutic techniques, community mediation,
and other forms of non-adversarial nego-
tiating to help process minor disputes
in small claims, family and other courts.
As the ‘litigation crisis’ deepened, these
early efforts supported the mobilization
of two competing critical masses of ADR
activists – one around a ‘community media-
tion’ model, the other around the ‘multi-door
courthouse.’
Both groups devoted considerable energy
into theorizing and disseminating their
approach, holding conferences, publishing
manifestos in prominent law journals and
seeking support from foundation or other
established centers. Both also worked hard to
articulate and recombine their models with
prevailing models and institutions, including
the ‘Great Society’ vision of federally
funded community social programs and the
increasingly ascendant new federalism.
Moreover, once advocates could articulate
ADR with the divorce revolution and
no-fault divorce as a non-adversarial solution
to custody and interpersonal problems, they
gained a lever for professionalizing media-
tion and diffusing its practices. They used
conferences, new organizations, instructional
videos, newsletters, and the like to further
codify and disseminate ADR, effectively lay-
ering ADR into the legal system as an
increasingly taken-for-granted complement
to conventional legal arrangements.
Creed, Scully and colleagues’ studies of
gay rights/GLBT activists shed additional
light on how movements working within
existing institutions can help establish new
practices by exploiting contradiction and
multiple logics, importing or redeploying
logics across settings, and articulating or
recombining new elements with prevailing
models, myths or concerns (Creed & Scully
2000; Creed, Scull, & Austin 2002; Scully &
Segal 2002; Scully & Creed 2005; see also
Raeburn 2004). Decisive here were activists’
use of contradiction and recombination to
disturb taken-for-granted assumptions, high-
light injustice, and legitimate claims for
reform. For example, activists strategically
deployed identity in face-to-face encounters
with co-workers and supervisors. They used
casual mentions of partners’ gendered names
when sharing experiences of mundane activ-
ities and enacted non-stereotypical behavior
 SOCIAL MOVEMENTS AND INSTITUTIONAL ANALYSIS
to challenge stigma. They also employed nar-
ratives of discrimination or inequality to
highlight hypocrisies, evoking understand-
ings that everyday routines produce injustice,
and activating listeners’ identities as non-
prejudiced persons.
In addition, activists used their knowledge
and status as insiders and loyal corporate cit-
izens to couch reforms like domestic partner
benefits as good business practice or expres-
sions of firms’ espoused commitments to
diversity. Furthermore, like those fighting for
the federal Employment Non-Discrimination
Act, activists within firms imported higher
order logics or frames, articulating domestic
partner benefits and other gay-friendly poli-
cies with broader civil rights frames, values
of fairness and equality, corporate social
responsibility, and concerns with competi-
tiveness in an increasingly diverse world. In
a sense, GLBT movements worked for
change by simultaneously coming out and
fitting in; that is, by carefully articulating and
combining difference, assertions of GLBT
identity and new practices with ‘normal’
everyday life, insider identities as dutiful cor-
porate citizens, and ongoing organizational
concerns. Here too, diffusion of new prac-
tices like domestic partner benefits was a
political process, resting on mobilization,
contestation, framing and the recombination
of prevailing models and cultural elements in
and across firms.
As Moore shows, the institutionalization of
public science organizations in American pol-
itics also rested critically on multiple logics,
mobilization by insiders, and the role of
movements as bricoleur-agents of recombina-
tion and redeployment (Moore 1996; Moore
& Hala 2002). During the 1960s and 1970s,
university scientists faced increasingly severe
contradictions between the logic of public
service or social utility, on the one hand,
and the logics of objectivity, non-partisanship
and detachment as scientists, on the other. In
fact, extant ways of joining science and poli-
tics – serving the public interest by serving
the state – had become distinct liabilities.
University scientists not only faced attacks
659
by anti-war and environmental groups
for their connections to the military and
chemical industry, but they also began to
criticize themselves and their peers for these
connections.
At first, activists tried to link science and
politics and mobilize for change within estab-
lished science associations. But mixing parti-
sanship and ‘pure science’ produced public
discord within the scientific community and
directly challenged its legitimacy as an impar-
tial, objective producer of facts. This led sci-
entist-activists to create a hybrid form – the
public science organization – that resolved
this tension by recombining science and
politics in novel ways. Through dedicated
organizations like the Union for Concerned
Scientists and Scientists’ Institute for Public
Information, scientists could provide nuclear
safety information, challenge non-scientists’
uses of science, and address the public inter-
est without risking their credibility as scien-
tists by acting in openly partisan ways.
Moreover, hybrid organizations separate
from professional and political associations
provided activists with a vehicle for public
science that directed attention away from
the inner workings of the scientific commu-
nity, letting scientists mobilize politically
without calling their legitimacy as scientists
into question or sparking conflict within
professional communities.
All of these studies highlight rich opportu-
nities for exploring the role of movements
within existing institutions and organiza-
tions. In general, social life is rife with col-
lective mobilization, and whether these
efforts are made by challengers working as
outsiders to redefine existing arrangements,
insiders seeking change from within, or elites
striving to keep existing structures intact
(Fligstein 1990, 1996), a focus on move-
ments expands our understanding of institu-
tional dynamics. Moreover, mobilization can
occur at the level of the field as with anti-cor-
porate forces or ecological activists promot-
ing communitarian alternatives to corporate
capitalism and with scientists forging new
associations to link expertise to politics.
660 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Or it can occur within and between organiza-
tions as recycling advocates pressed for
more substantive forms of recycling or as gay
and lesbian groups pushed for recognition
and benefits. A focus on movements,
therefore, sheds new light on path creation
and change, particularly when it attends to
the multi-level character of the institutional
context.
To be sure, the distinction between move-
ments operating outside and inside fields
raises questions for future work about their
different enabling conditions, trajectories or
effects. Insiders will more likely pursue dif-
ferent tactics and forms of contestation than
outsider groups. They will likely mobilize
collectively in different ways, frame
problems and solutions differently, and dif-
ferentially negotiate or exploit structures,
networks and institutional frames provided
by established fields. And they may be
more likely to err on the conservative side.
Conversely, outsiders pursuing disruptive
activities face legitimacy dilemmas that may
pressure them to mobilize as insiders, articu-
late their projects with existing institutional
logics, or form separate, decoupled organiza-
tions for disruptive and conventional action
(Elsbach & Sutton 1992; Lipsky 1968). And,
as we suggest in part IV, we can also prof-
itably consider how outsider and insider
movements occur in waves or sequences,
producing historical trajectories of change.
Fortunately, future work on both kinds of
movements can exploit existing research on
how institutional contexts shape mobilization
and movement efficacy.
INSTITUTIONAL FIELDS AS CONTEXTS
FOR MOVEMENTS
While the work just described provides rich
depictions of movements as agents of institu-
tional creation and change, analysts of ‘out-
sider’ and ‘insider’ movements have also paid
careful attention to the institutional context
of social movements. They have not only
begun to theorize how multiple logics within
fields can motivate contestation and collec-
tive action (Stryker 2000; Seo & Creed 2002;
Morrill 2006), they have also considered how
existing institutional contexts shape mobi-
lization and movements’ capacities for pro-
ducing change. Indeed, addressing relations
between movements, institutional contexts
and outcomes lays the foundation for more
sophisticated analyses of power and agency.
It lets scholars go beyond simple power elite
or interest group arguments about agency
and change to consider how extant institu-
tions block access, provide challengers with
levers and openings, and otherwise condition
actors’ ability to translate numbers, resources
or organization into change. Moreover, in
exploring relations between movements,
contexts and outcomes, institutionalists have
made good use of research on political oppor-
tunity structure (McAdam 1999; Tarrow 1998;
McAdam, Tarrow, & Tilly 2002) and related
arguments about institutional mediation
(Amenta, Carruthers, & Zylan 1992; Amenta
& Zylan 1991) and institutional contingency
(Thornton & Occasio 1999; Bartley &
Schneiberg 2002; Schneiberg & Clemens
2006; Lounsbury 2007), supporting a deepen-
ing integration of movements research and
neo-institutional analysts.
Work at this interface has identified vari-
ous features, institutional and political fields
that condition movement dynamics or suc-
cess. These include the legacies of prior
policies, the receptivity of institutional
authorities toward challengers’ claims, the
concentration of resources within a field, and
the prevalence of certain cultural models.
Work on contexts has also shown how the
multi-level character of fields provides open-
ings for challengers, and how movements
evoke counter-movements within fields.
Davis and colleagues’ studies of shareholder
movements nicely document how success may
hinge on the institutional context (Davis &
Thompson 1994; Davis & Greve 1997; Davis
& McAdam 2000; Vogus & Davis 2005).
During the 1980s, shareholder activists
mobilized to promote new conceptions of the
 SOCIAL MOVEMENTS AND INSTITUTIONAL ANALYSIS
corporation, transform the markets for corpo-
rate control, and break the hold of vested
managerial interests over large US firms. To
this end, shareholder groups formed new
organizations, launched takeover actions
against individual firms, used existing gover-
nance machinery to oust entrenched man-
agers, and sought legislative and regulatory
changes, relying on their considerable mate-
rial resources and connections. Yet activists’
ability to translate resources into change was
institutionally and organizationally medi-
ated. The concentration of assets held by
institutional investors provided shareholder
activists with critical leverage in firm-level
conflicts with management over the control
of corporations. The SEC’s review of proxy,
rules weakened managers’ ability to control
votes and signaled a favorable regulatory
stance toward shareholders and corporate
reform. State governments that were heavily
dependent on franchise fees for incorporation
were reluctant to alienate shareholder groups
by passing anti-takeover statutes that would
deprive shareholders of a key weapon. And
prosperity made it harder for vested interests
to use fears of economic ruin to mobilize
political support for anti-takeover legislation.
Soule and her colleagues likewise trace
how the ability of the women’s movement to
secure equal rights amendments from
American states rested on political and insti-
tutional opportunity structures (Soule &
Olzak 2004; Soule & King 2006).
Mobilization for equal rights amendments
was more likely to result in ratification
in states with a high level of electoral
competitiveness, extensive histories of prior
civil rights legislation, and favorable
(Democratic) allies in power. It was also
more effective in public opinion climates
characterized by the prevalence of new con-
ceptions of women’s roles in private and
public spheres.
Findings that public opinion climates
enhance prospects for movements are partic-
ularly noteworthy here, as they move beyond
traditional realist formulations about politi-
cal opportunity structure to consider how
661
culture shapes mobilization and change.
Some of the studies discussed above high-
light how institutionalized models or logics
represent cultural resources for mobilization,
framing and change. So does research by
Lounsbury and Hironaka, Schofer and Frank.
Shifts in the recycling field from a radical,
holistic logic to a technocratic logic facili-
tated the creation of recycling advocacy
groups in urban regions in response to con-
test waste management through incineration
(Lounsbury 2005). More broadly, the diffu-
sion of environmentalism as a global blue-
print for the nation state has enhanced the
capacity of domestic environmental activists
to organize and slow environmental degrada-
tion (Frank, Hironaka & Schofer 2000;
Hironaka & Schofer 2002; Schofer &
Hironaka 2005). As these studies suggest,
formal mechanisms (e.g., environmental
impact assessments) and the prevalence of
global environmentalism as a valued cultural
model have legitimated environmental move-
ments, fueling organization, while creating
rhetorical and procedural opportunities for
activists to point out failures and pursue legal
actions.
Research on movements and institutional
contexts has also documented how the
multi-level or federated character of institu-
tions sometimes creates opportunities for
movements. The multi-level nature of fields
is central to institutionalist imageries
of context (Scott 2001; Schneiberg &
Clemens 2006), and bears directly on move-
ments’ capacities to produce change.
As Davis and colleagues’ analyses of share-
holder activism show, challengers sometimes
have to mobilize simultaneously at multiple
levels within fields to assert new models and
effect change (Davis & Thompson 1994;
Davis et al. 1994; Davis & Greve 1997;
Vogus & Davis 2005). Shareholder
groups were mainly interested in promoting
new conceptions of the corporation and
contesting entrenched management at the
firm (‘lower order’) level. But they quickly
found that they had to take the fight to the
state and federal level. Influencing these
662 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
‘higher order’ units were essential for chal-
lengers’ ability to make change, since state
and federal laws set the terms for mobiliza-
tion and access at the firm-level, defining
rules for proxy systems, takeovers and
whether shareholders could act collectively.
By blocking anti-takeover legislation, secur-
ing new proxy rules, and so on, shareholder
activism at state and federal levels created
critical opportunities for mobilization against
and within corporations.
The fractured and multi-level structure of
institutions also enabled anti-corporate
groups to get insurance rate regulation on the
states’ agenda in the early twentieth century
(Schneiberg & Soule 2005; Schneiberg &
Bartley 2001; Schneiberg 1999). Challengers
seeking decentralized, producer republican
models of economic development were
largely closed out of policy making and
had little leverage for their regulatory ambi-
tions in New York, Connecticut and other
centers of the ‘insurance combine.’ But the
more peripheral, agrarian states proved more
open to populist pressures, enabling agrarian
and independent producers to assert statist
regulatory measures in the insurance field,
disrupt markets, and organize mutuals.
Insurers tried to close off access entirely by
suing in state and federal courts to void
states’ rights to regulate insurance prices.
Yet, that strategy backfired when advocates
of regulation found an unexpected ally in
the US Supreme Court, which opened the
door for further intervention in states by
ruling that insurance was ‘affected with a
public interest’ and thus subject to the states’
authority.
Indeed, the multi-level character of fields
creates possibilities for movements to couple
field-level and intra-organizational mobiliza-
tion, with the characteristics of organizations
serving as opportunity structures that shape
the capacities of movements within organiza-
tions to produce change. For example, uni-
versities and colleges that had previously
experienced recycling activism on campus
hired full-time ecologically-committed coor-
dinators and created full-blown recycling
programs while schools without movements
tended to adopt a more minimalist approach
that was staffed by part-time custodial
staff (Lounsbury 2001). Moreover, ecologi-
cal activists were better able to gain
footholds for securing programs at larger
college and universities with more resources,
selective colleges with histories of
activism, and universities with environmen-
tal majors that could serve as local allies
or institutional conduits for field-level
pressures.
Finally, researchers attending to context
have also found that outcomes are shaped by
whether or not initial movements catalyze
counter-movements within fields. Vogus and
Davis’ (2005) study of anti-takeover legisla-
tion takes one step in this direction by ana-
lyzing how managerial and local elites
counter-organized in response to shareholder
activism to obtain legislation that protected
corporate managers from raiders and hostile
takeovers. Soule and colleagues’ analyses go
one step further. In analyzing states’ adoption
of the Equal Rights Amendment, they simul-
taneously include variables for the presence
or strength of women’s movement groups
(NOW and AAUW) and anti-ERA organiza-
tions (Soule & Olzak 2004; Soule & King
2005). Similarly, in modeling the passage of
anti-hate crime laws, they include counts of
pro-gay community organizations and
community centers, on the one hand, and
measures of conservative group lobbying
and the presence of a Family Policy
Council, on the other (Soule 2004). Ingram
and Rao (2004) also think in terms of move-
ments and counter-movements, but elaborate
a different research strategy, analyzing the
passage and then the repeal of legislation
banning chain stores as indicies of populist
mobilization and chain store counter-
mobilization over the rise of new market
forms. In this way also, the capacities of
movements to promote change or new path
creation rests not just on size, resources or
movement strength, but also on the structure
and dynamics of the political and institu-
tional context.
 SOCIAL MOVEMENTS AND INSTITUTIONAL ANALYSIS
SOCIAL MOVEMENTS AND
NEO-INSTITUTIONAL THEORY:
FUTURE DIRECTIONS
We conclude our review by discussing new
frontiers for analyzing combinations of insti-
tutional process and social movements as
sources of path creation and change. Future
work, we suggest, can and should attend more
carefully to key methodological issues of
measurement and modeling. It can also fruit-
fully consider how movements produce
change as political forces or conditions for dif-
fusion, while simultaneously addressing how
movements are endogenously produced and
always institutionally conditioned. Such an
approach captures the substantial benefits of
introducing contestation and collective action
into institutional analysis. But it does so while
avoiding the traps of either invoking move-
ments as extra-institutional forces or simply
using movements to assert agency and aban-
don institutional context entirely. Such an
approach, in other words, engages, rather than
avoids, the paradoxes of embeddedness and
analytical impasses involved in explaining
path creation and change (Seo & Creed 2002;
Schneiberg 2007). We begin with a discussion
of methodological issues, and then emphasize
two major substantive categories for future
research – the outcomes of movements and the
origins of institutions and movements.
Measuring and modeling
movements
Much of the work on movements from a neo-
institutional perspective has relied on quali-
tative and historical methods, playing to
those methods’ strengths in theory construc-
tion and producing a rich body of theory and
thick descriptions. Supplementing qualitative
work with multivariate quantitative research
can not only help systematize theory con-
struction in important ways, it can also help
clarify causal relations, isolate effects, and
strengthen inferences about movement emer-
gence and outcomes.
663
There are substantial methodological chal-
lenges involved in documenting movement
effects on path creation and institutional
change, challenges that literally multiply as
researchers address the moderating influence
of existing institutional contexts. At a mini-
mum, documenting movement effects
depends on credibly measuring the develop-
ment, strength and activities of challenger
movements. Existing research linking move-
ments, organizations and institutions has
made real progress here, using the presence
of movement organization or chapters,
counts of movement organizations, and the
number of movement members to document
movement emergence and strength (e.g.,
Lounsbury 2001; Schneiberg 2002; Soule &
King 2006). It also suggests that future work
can more directly tap such effects by measur-
ing protests and other movement activity, or
by using newspaper coverage, public hear-
ings or other measures of controversy to
assess whether movements have been able
to force issues or new conceptions onto the
public agenda or call existing arrangements
into question.
Documenting movement effects also rests
critically on using movement research and
multivariate approaches to isolate and disen-
tangle the effects of movement strength or
activity, mobilizing structures, framing, and
institutional or political opportunity struc-
tures (for exemplars, see Vogus & Davis
2005 and Soule & King 2006). Absent multi-
variate designs or careful comparative analy-
sis, inferences about movement effects on
change remain vulnerable to counterclaims
about spurious relations.
Furthermore, designing research that
attends explicitly to multiple factors is partic-
ularly important for addressing how existing
institutions and opportunity structures
enhance or undermine movements’ capaci-
ties for influence, disruption and new path
creation. Research on institutions or political
opportunity structures sometimes analyzes
those factors additively. But whether made
by movement scholars or neo-institutional-
ists, arguments about political opportunity
664 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and institutional mediation are fundamen-
tally arguments about interaction effects
(Thornton & Occasio 1999; Bartley &
Schneiberg 2002; Schneiberg & Clemens
2006). They are arguments that political
or institutional configurations amplify or
blunt the effects of movement numbers,
resources or activities on policies, paths and
change. And they can be implemented empir-
ically in relatively straightforward ways
(Amenta & Zylan 1991; Amenta et al. 1992;
Schneiberg 2002; Soule & Olzak 2004;
Soule 2004).
Mobilization outcomes:
movements, politics and
(heterogeneous) diffusion
A second, more substantive direction for
future research revisits the relationship
between collective mobilization and diffu-
sion, and considers how movements operate
as political forces in promoting the spread of
alternatives. Thinking in these terms keeps
politics and power at the forefront of a recon-
stituted institutional analysis, while high-
lighting how diffusion is often a contested
political process (Schneiberg & Soule 2005;
Fiss & Zajac 2005; Hirsch & Lounsbury
1997). Researchers have demonstrated that
social movements can shape the composition
of fields and fuel path creation by promoting
new kinds of forms such as craft breweries
(Carroll & Swaminathan 2000), nouvelle
cuisine (Rao, Monin & Durand 2003),
mutual, cooperative and state enterprises
(Schneiberg 2002, 2007), and community-
based, non-profit recycling centers
(Lounsbury, Ventresca, & Hirsch 2003; see
also Clemens 1997; Rao, Morrill & Zald
2000). Yet, as also noted, mobilization can
spark counter-mobilization by powerful
vested interests threatened by novel prac-
tices, pitting industrial brewers against craft
producers, managers and unions against
shareholders, or corporations against cooper-
atives and state enterprises. Such counter-
attacks are typically political, often involve
state power, and can hinder, halt or even
reverse the diffusion of new forms.
Under these conditions, diffusion is a con-
tested process, and the success of the initial
movement for alternatives depends on
whether or not challengers can muster politi-
cal support to place and keep alternatives on
the agenda (Soule & King 2005; King,
Cornwall & Dahlin 2005). Under these con-
ditions, the diffusion of novel practices
depends on challengers’ abilities to mobilize
sufficient power (resources, numbers, organ-
ization) to secure authorizing legislation,
defend alternatives politically, and so on. For
example, the diffusion of mutuals and coop-
eratives in the US economy was most exten-
sive where anti-corporate forces could secure
decisive political victories against corpora-
tions, including anti-trust laws and populist
railroad regulation (Schneiberg 2002, 2007).
Under these conditions, movements matter
not just as a conduit, theorizer or assembler
of frames and new forms, but also, and more
critically, as an accumulator of political
power and thus an essential political condi-
tion for diffusion.
Considering movements as political condi-
tions for diffusion revises conventional views
of the relationship between movements,
institutions and outcomes. Arguments about
political opportunity structure trace how
existing institutional structures condition the
effects of movements and mobilization on
policies and change. Here, politics and
power are institutionally contingent (Amenta
et al. 1992; Thornton & Occasio 1999;
Thornton 2002; Bartley & Schneiberg 2002).
As institutional systems become more open to
challengers or provide them with elite allies,
movements’ abilities to translate conventional
resources into desired outcomes will increase.
Favorable institutional contexts amplify the
effect of movement numbers, organizations or
resources on change outcomes.
Conceptualizing movements as political
forces for diffusion inverts this logic, sug-
gesting that institutional dynamics of diffu-
sion are politically contingent. Whether or
not actors can adopt, borrow or translate
 SOCIAL MOVEMENTS AND INSTITUTIONAL ANALYSIS
novel forms depends on the capacities of
challenger movements to amass political
resources, defend novel forms against
counter-attacks, and create favorable politi-
cal contexts for the spread of alternatives
(Schneiberg, King & Smith 2008). Here,
institutional effects depend on movement
power. Generally speaking, the likelihood
of an organization adopting a new practice
increases as professional communities
endorse the practice and the number of prior
adopters increase. Professional endorsement
and increased prevalence of practices
increases their legitimacy. But, where novel
forms are subject to contestation, diffusion
will require the mobilization of numbers,
resources or organization to defend and pro-
tect these alternatives. Absent such mobiliza-
tion, endorsement or prior adoption will have
little or no effect on subsequent adoption.
Yet, as champions of alternatives mobilize
and shift the balance of power, endorsement
and prior adoptions will have increasingly
powerful effects on subsequent adoption,
translation or other institutional processes.
Overall, our knowledge of how move-
ments create favorable political contexts for
the diffusion and translation of alternatives is
relatively undeveloped. However, future
research can draw on both a multi-level per-
spective and existing strategies for modeling
diffusion. In principle, movements can
support diffusion as a political force at either
the field-level or within organizations.
Movements can raise the overall receptivity
of organizations to new practices by amass-
ing numbers and resources to contest field-
wide authorities, report success stories in
media, enhance the visibility of new prac-
tices, or demonstrate the possibility of dis-
ruption and change. As movements mobilize
effectively at this level, they create political
space for alternatives and multiple logics
across entire fields, increasing the risk of
adoption of novel practices in the aggregate.
Alternatively, movements can shift the
balance of power and enhance receptivity by
mobilizing ‘locally’ within individual organ-
izations and making particular organizations
665
or subsets of organizations susceptible to
alternatives that are endorsed or adopted by
peers. Here, movements operating as politi-
cal forces within organizations can fuel
a differential flow of novel practices across
organizations.
Furthermore, as movements become more
powerful, they can fuel variation in the con-
tent of practices that diffuse within fields.
In the recycling case, activist groups on
campuses pushed colleges and universities to
go beyond minimal approaches to recycling
staffed by part-time custodial staff to
adopt programs with full-time ecologically-
committed coordinators (Lounsbury 2001).
Similarly, in the insurance case, increasing
the political strength of anti-corporate forces
drove some states beyond limited anti-
discrimination forms of price regulation to
full rate control measures that gave regula-
tors authority to order comprehensive changes
in rates (Schneiberg & Bartley 2001).
Fortunately, well-developed tools are
available for analyzing movements as politi-
cal conditions for diffusion, provided meas-
ures of movement strength or presence are
available. To analyze how movements create
possibilities for diffusion by shifting the bal-
ance of power at the field-level, models of
adoption can employ interaction effects to
examine whether the political strength of
movements at the field-level moderates the
effects on organizational adoption of prior
adoption by peers or endorsement by expert-
professionals. To analyze these dynamics at
the organizational level, a similar strategy
could be used, provided measures are
available of the presence, strength or efficacy
of movements within organizations.
Researchers could again use interaction
effects to see if the strength of movements in
organizations increases the effects of preva-
lence or endorsement on the likelihood of
those organizations adopting novel practices.
Alternatively, one can use heterogeneous
diffusion models (Strang & Soule 1998)
to see whether increasing movement
strength within organizations renders them
more susceptible to the influence of peers
666 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
or professions. As Soule’s (2006) study of
university divestment shows, student protests
on campuses against investing in South
Africa did not directly promote divestment.
But by increasing awareness among adminis-
trators of university and surrounding com-
munities, demonstrations were a nagging
reminder that rendered colleges and universi-
ties more vulnerable to legitimacy pressures,
making them more likely to divest as their
peers jumped on the bandwagon.
Finally, future research can use existing
analytical strategies, including competing
hazards models, to analyze how growing
movement strength might promote the diffu-
sion of increasingly varied, comprehensive
or radical alternatives (Lounsbury 2001;
Schneiberg & Bartley 2001). In this way, too,
institutionalists can address how movements
as political forces shape not just the overall
flow of practices across fields, but also the
differential flow of alternatives and practice
variants within them.
The origins of institutions: history,
sequence and layering
An important and neglected question in neo-
institutionalism is where institutions such as
fields, practices or paths come from and how
they are forged or elaborated over time. As
sociologists have emphasized, there is never
a clean slate. Rather, new fields and arenas of
social life are typically constructed from the
rubble, or flotsam and jetsam, of previous
institutions or paths not taken (Stark 1996;
Schneiberg 2007) or from variations pro-
duced within extant fields (Lounsbury &
Crumley 2007). After all, as Meyer and
Rowan (1977: 345) observe in their classic
piece, ‘the building blocks for organizations
come to be littered around the social land-
scape; it takes only a little entrepreneurial
energy to assemble them into a structure.’
Moreover, new systems are often not created
in one fell swoop through one wave of diffu-
sion or comprehensive settlements. Rather,
paths may emerge through multiple waves,
over time, via sequences or successive stages
of translation, layering, theorization and
assembly that elaborate and innovate on pre-
vious, partial accomplishments (Streeck &
Thelen 2005). And central to field and path
creation is some sort of collective mobiliza-
tion or movement, not just a single burst of
organization, but also waves or cycles of
mobilization and organizational formation.
The parallels between institutionalist
imageries of path creation as waves of layer-
ing, on the one hand, and movement research
on cycles of mobilization and protest, on the
other, suggest that linking the two can pro-
vide new insights for future research on path
creation and change, while adding new his-
torical dimensions to neo-institutional schol-
arship. Movement scholars have done
important work in highlighting the sequenc-
ing of social movements and cycles of protest
(e.g., Tarrow 1998), tracing, among other
things, how contentious politics that involve
tactics such as protest are transformed into
more conventional forms of political action
such as lobbying (Meyer & Tarrow 1998;
Kriesi, Koopmans, Duyvendak & Giugni
1995). Minkoff (e.g., 1993, 1997) adds orga-
nizational dimensions to the analysis of
sequences, showing how the proliferation of
radical organizations created legitimacy and
favorable political opportunities for subse-
quent organization by advocacy and practi-
tioner groups, institutionalizing civil rights
more deeply within American politics.
For their part, institutionalists have just
begun to think in these terms. But prelimi-
nary efforts to analyze path and field creation
as waves of mobilization, structuration and
layering have established a new direction for
future research. Lounsbury, Ventresca and
Hirsch (2003) took one step in this direction,
showing how efforts by early and more radi-
cal ‘outsider’ environmental movements in
the 1960s and 1970s to restructure capitalism
via not-for-profit, community-based recy-
cling centers unintentionally laid foundations
for subsequent mobilization by insider
groups in the 1980s to create a for-profit
recycling industry. Most non-profit recycling
 SOCIAL MOVEMENTS AND INSTITUTIONAL ANALYSIS
centers proved economically non-viable, but
they nonetheless trained a generation of
Americans in the habits of saving, cleaning,
and sorting their trash, a critical cultural
infrastructure for the creation of markets
based on curb-side pick up.
Schneiberg (2007; Schneiberg, King &
Smith 2008) takes this avenue of research a
step further in analyzing the development of
mutual, cooperative and publicly owned
enterprise in the US economy. For the most
part, populists and the radical anti-corporate
movements of the late nineteenth and early
twentieth centuries faced decisive defeats in
their efforts to forge alternatives to corporate
capitalism. But even though they collapsed,
these movements nevertheless left behind
organizational, cultural and institutional
legacies – bit and pieces of the paths they had
pursued, including theories of order, regula-
tory fragments, local movement chapters, and
alternative systems of enterprise in key indus-
tries. These legacies of Populistera mobiliza-
tion, in turn, served as legitimating structures,
platforms and infrastructures for subsequent
collective mobilization in the same or related
industries, first during the Progressive era,
and then in the early New Deal. Indeed, suc-
cessive waves of reformers and anti-corporate
forces built or transposed theories, moral
sentiments and cooperative forms out from
insurance and other early sites of alternative
enterprise into the dairy and grain industries,
the electrical utility industry and banking,
elaborating what amounts to a secondary path
of industrial order in the US economy.
Haveman, Rao and Paruchuri’s (2007)
study of Progressivism and savings and loans
associations likewise highlights the distal
and often unintended effects of movements
on organizational fields. Progressive activists
quite deliberately and directly sought to
reform a variety of economic institutions,
from the railroads to savings and loan associ-
ations. Yet they also fostered Progressive
models of rationality, bureaucratization and
expert management within the thrift industry
indirectly, via two intermediary institutions.
Activists formed Progressive newspapers
667
that exposed corruption and promulgated
reform principles. They also advocated city-
manager forms of municipal government that
exemplified those principles, providing tan-
gible analogies for reformers within the thrift
industry. Both institutions promoted the con-
stitutive legitimacy of bureaucracy, prompt-
ing saving and loans associations to adopt
organizational forms more consistent with
‘modernist’ moral sentiments.
Nor are these processes confined to eco-
nomic industries or organizational dynamics.
As Armstrong (2002, 2005) illustrates, the
legacy of initial movements may also include
the establishment of new identities, cultural
tools such as frames and logics, and ‘creative
contexts’ that enable subsequent groups to
continue struggles, mobilize and realize
new gains in their efforts. The rise of the
New Left in the 1960s enabled the creation
of new kinds of lesbian/gay organizational
identities in San Francisco in the early 1970s.
The development of gay identity politics, in
turn, proved crucial in structuring subsequent
lesbian/gay organizations as well as enabling
changes within mainstream organizations
such as the establishment of domestic partner
benefits (Creed & Scully 2000; Scully &
Creed 2005). While this work traces the
sequencing and layering from ‘outsider’ to
‘insider’ movements, it would be interesting
to also understand how ‘insider’ movements
facilitate ‘outsider’ mobilizations.
Overall, the approach to movements and
institutions that we advocate celebrates the
heterogeneity of actors, multiple logics and
practice variation. A focus on such multiplic-
ity revises the isomorphic imagery of the
canonical two-stage diffusion and punctuated
equilibrium models (e.g., Tolbert & Zucker
1983). Such a perspective concentrates less
on the contagion of unitary practices or a sin-
gular rationality, but rather on multiple forms
of rationality that inform the decision making
of actors in fields (Bourdieu 1984), and pro-
vide foundations for ongoing struggle and
contestation. This conceptualization of insti-
tutionalization and fields as multiple, frag-
mented and contested (Schneiberg & Soule
668 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
2005; Washington & Ventresca 2004;
Lounsbury 2007) is a crucial ontological
starting point for a new wave and generation
of institutional scholars. And when combined
with a renewed attention to movements, it
directs analytical attention to how historical
legacies of prior social action become
embedded in existing fields, providing bases
for sequences of mobilization, and the con-
struction of new paths from the elements or
ruins of old or forgotten orders. The early
work in this direction has proven fruitful and
promises to propel institutional analysis for
many years to come.
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 28
Examining ‘Institutionalization’:
A Critical Theoretic Perspective*
David J. Cooper, Mahmoud Ezzamel and Hugh Willmott

INTRODUCTION theory has taken on board and accommo-

Various forms of critical theory have been
suggested to illuminate social practices.
Versions of such theories has been promoted
for the analysis of management, organiza-
tions and work (e.g. Burrell, 1988; Burrell,
1994; Alvesson and Willmott, 2004) and this
chapter considers how such analyses, with
their emphasis on power, domination and
emancipation, can be used to examine a cen-
tral focus of institutional theory, namely
institutionalization. Limitations and anom-
alies in institutional theory have stimulated
its development from ‘old’, through ‘new’, to
‘neo’ variants of analysis1 (DiMaggio and
Powell, 1991). At each stage, institutional
dated critiques which, alternatively, have
called for a rebalancing of the emphasis
given to the conditioning constraints of
‘structure’ or the innovative capabilities of
‘agency’ (Reed, 1997). This chapter steps
back from this process of critique and incor-
poration to provide a ‘critical theoretic’ illu-
mination of institutional theory to facilitate
reflection on its distinctiveness and limits.
We begin by noting how, in their different
ways, varieties of institutional theory and crit-
ical theory share an attentiveness to institu-
tionalization, conceived as processes that
order and constrain but also enable forms of
interaction and organization. In institutional
theory, dominant ‘logics’ that are irreducible

*An earlier version of this paper was presented to the Organization Theory Research Group at the Tanaka
Business School, Imperial College, London. We would like to thank participants at this meeting for their help-
ful and supportive discussion of the paper and especially the comments received from Marc Ventresca and
André Spicer. We are especially indebted to Nelson Phillips and Jaco Lok for their invaluable suggestions for
focusing and clarifying central arguments of the paper. Albert James assisted with the references. David Cooper
and Mahmoud Ezzamel thank the Social Sciences and Humanities Research Council for financial support, and
David Cooper thanks the Certified General Accountants of Alberta for their financial support.
674 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
to rational choices or a to a series of environ-
mental contingencies, are held to account for
why, for example, within a population of
organizations there is an homogeneity of
form and practice. For critical theorists,
processes of institutionalization account for
how patterns of domination and oppression –
for example, racism or sexism but also more
subtle, normalized forms of subjugation such
as bullying and pressurizing at work –
become naturalized in workplaces and else-
where yet, in principle, are open to transfor-
mation. What they share, nonetheless, is a
rejection of analysis founded upon method-
ological individualism (e.g. rational choice
theory)2 that ignores how ‘choices’ are
embedded in, and organized through,
processes that are infused with value. So, for
example, in principle, institutional theory
problematizes analyses that do not appreciate
how the very idea of ‘choice’, for example,
articulates a particular, institutionalized way
of making sense of the world. Critical analy-
ses extend and radicalize this understanding
as institutionalization is examined as a means
of domination and oppression.
We conceive of the differences – of
emphasis and bearing – between institutional
and critical theories in terms of their con-
trasting value-orientations.3 Crucially, we
reject any suggestion that institution theory is
value-free whereas critical theory is value-
laden or normative. Instead, both are norma-
tive, although in different ways. In broad
terms, institutional theory is conservative
insofar as it inclines to naturalize the status
quo and shies away from (critical) theories
that, in contrast, problematize the status quo
as oppressive. A key difference is that the
normativity of institutional theory is
occluded by its pretensions to positivist
objectivity whereas the normativity of criti-
cal theory is comparatively explicit.
A guiding thread running through the
chapter is the (institutional) idea that critical
theory and institutional theory are embedded
in differing ‘general views of life and
the Universe’ that articulate different projects
which are inherently political in their
commitments and consequences. The differ-
ences are both theoretical and practical. As
Lounsbury (2003: 16) notes, differences of
orientation to ‘the problem of order as well
as conflicting social imageries of the rela-
tionship between culture and power lead
institutional and critical analysts of organiza-
tions to ask different kinds of questions’.
This observation helps to account for why, in
the voluminous literature of institutional
theory, there are so few references to key crit-
ical thinkers, such as Marx, Habermas and
Foucault.4 Advocates of institutional theory
position and develop their work in rela-
tion to rational choice theory, contingency
theory and resource dependency theory.
Consideration of the possible relevance of
critical theory concepts of ‘totality’, ‘contra-
diction’ and ‘praxis’ (Benson, 1977) is highly
unusual (e.g. Seo and Creed, 2002).
Tellingly, what is perhaps the most pene-
trating critique of institutional theory
(Hasselbladh and Kallinikos, 2000) has been
ignored in the plethora of institutional papers
that have appeared since its publication.5
We will argue that institutional theory is
embedded in a distinctive tradition of social
scientific enquiry that is preoccupied with the
possibility of developing more objective
knowledge of what it conceives the social
world to be (that is, a product of processes of
institutionalization). A concern to enhance
prediction – for example, by researching how
strategic responses ‘are predictable largely in
terms of the nature of institutional pressures’
(Oliver, 1991: 174) in order to secure
improved control of the social world – pro-
vides a taken for granted, but rarely interro-
gated, impetus for institutional theory. Other
possible traditions of social science –
hermeneutic or critical (see Bernstein, 1976) –
are rarely contemplated or debated. In con-
trast, critical theoretic analysis conceives of
social scientific knowledge production in
relation to its capacity to de-naturalize the
present, and thereby to open up questions
of whether the conditions and consequences
of present circumstances are oppressive or
emancipatory (and to whom).
 EXAMINING ‘INSTITUTIONALIZATION’: A CRITICAL THEORETIC PERSPECTIVE
From these introductory remarks, it can be
appreciated that it is a challenging task to
relate institutional theory to critical theory.
Critical theory (and indeed institutional
theory) covers a vast and expanding terrain
of intellectual endeavour (see Appendix) and
consideration of its connection(s) with insti-
tutional theory can be approached from
numerous angles. A review might, for exam-
ple, consider how key elements in institu-
tional theory relate to, deviate from, or run in
parallel to a more narrowly (e.g. confined to
Critical Theory, Marxism, and so on), or to a
more expansive (e.g. extending to poststruc-
turalist theory) notion of critical theory.
Alternatively, a review of their relationship
might concentrate on those contributions to
institutional theory that have selectively
deployed elements of critical theory to refine
or augment their analysis; and such a review
could be extended to discuss how other ele-
ments of critical theory may be incorporated
in the development of institutional theory.
If, however, the value-orientations of insti-
tutional theory and critical theory are
believed to diverge significantly, as we
have suggested, then it is an unrewarding
challenge to imagine how either theory
can be subsumed within the other without
diluting or compromising their distinctive
intent and associated contributions to
knowledge.6 Our favoured approach, there-
fore, develops an appreciation of, and respect
for, their differences; and it explores how
a variant of critical theory may be engaged
to shed some new light upon the particularity
and limits of institutional theory but without
the restrictive and subjugating requirement
of having to limit an assessment or demon-
stration of its relevance and value as a
source of remedies for problems preoccupy-
ing institutional theorists.
Accordingly, in this chapter, in-depth
attention is given to one key contribution to
critical theory – the work of Michel Foucault.
We mobilize his thinking to give some indi-
cation of what it could mean to think criti-
cally about the value-orientation and
contribution of institutional theory; and,
675
more specifically, to reflect critically upon
the role and relevance of notions of ‘power’
and ‘agency’ invoked by neo-institutionalists
to address its alleged anomalies and
limitations. We have two reasons for our
selection of Michel Foucault. The first is that
during the past decade and more his thinking
has been exceptionally influential in social
science as well as critical theory.7 The second
is that his writings on power and subjectifica-
tion are suggestive of an alternative under-
standing in which oppressive dimensions and
effects are the focus of analysis.
Subjectification is conceived by Foucault
as the ‘different modes by which ... human
beings are made into subjects’ (Foucault,
1983: 208). Foucault’s focus upon subjectifi-
cation has an (unexplored) resonance with
processes of institutionalization, not least
because, as Hasselbladh and Kallinkos
(2000: 701) put it, ‘institutionalization is sus-
tained and given meaning and direction
through its capacity to constitute distinctive
forms of actorhood’. A condition of institu-
tionalization, in other words, is subjects’
identification with the forms and practices
that it reproduces. For example, in modern
societies, the institution of actorhood – that is
the attribution of agency to subjects – is pre-
dominantly constituted and institutionalized
in ways that Weber (1978) has characterized
as ‘instrumental’. Actors’ identifications with
the institutions of work, family, religion, etc.
become progressively less traditional, affec-
tive or value-rational. Crucially, this does not
mean that we are any less habituated to, or
any less institutionalized or subjectified as
agents within zweckrational modes of
action.8 Indeed, the commonsense appeal of
rational choice explanations of action is,
from an institutionalist perspective, indica-
tive of the dominance of what, in a
Foucauldian analysis, might be identified as
a particular mode of subjectification. This
mode is disciplined by a specific conception
of competent agency that privileges and nat-
uralizes the exercise of conscious, sovereign
calculation to achieve desired ends with
appropriate means (see also Friedland and
676 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Alford, 1991). This chapter explores these
issues in more detail.
The next section provides a discussion of
how a particular understanding of institutions
has become naturalized in institutional
theory and introduces our focus on issues of
power and agency. This is followed by a brief
overview of critical theory before we attend
directly to Foucault’s contribution to concep-
tualizing power, knowledge, and subjectifi-
cation. Applying Foucault’s ideas, we then
consider some recent efforts to revise institu-
tional theory. A further section discusses a
number of issues arising from our explo-
ration of the relationship between institu-
tional theory and critical theory before we
draw together our main arguments.
INSTITUTIONAL THEORY AND
INSTITUTIONALIZATION
Before ... institutionalisms themselves become
institutionalized – reified as distinct ‘theoretical
strategies’, codified in textbooks, and taken as
given by practitioners – we had better take stock.
(Jepperson, 1991: 143–144)
Jepperson cautions against a forgetfulness of
the particularity of institutional theory – in
the sense that it is a construction based upon
specific, institutionalized assumptions.
Within this particularity, there is consider-
able diversity and debate (DiMaggio and
Powell, 1991) and recurrent attempts to rec-
oncile internal differences (e.g. Hirsch and
Lounsbury, 1997). Institutional theory’s par-
ticularity has been frequently surveyed and
typified (e.g. Scott; 1991; DiMaggio and
Powell, 1991) but, for the most part, has not
been critically addressed. In this section, we
examine this particularity through a series of
reflections upon institutional theory’s ‘take’
on institutionalization. We consider the con-
tributions of a number of leading proponents
of institutional theory and pay particular
attention to Berger and Luckmann’s discus-
sion of institutionalization as this has pro-
vided a key source of inspiration and
legitimation for institutional theorists. Our
specific focus is on questions of how
‘agency’ and ‘power’ are addressed and
incorporated within institutional theory.
Conceptualizing institutionalization
In his landmark text on institutional theory,
Scott (1995/2001) identifies Parsons’ defini-
tion of institutionalization as a synthesis
of the arguments of earlier major theorists
(e.g. Veblen, Commons, Durkheim, Weber):
‘A system of action is said to be institution-
alized to the extent that actors in an ongoing
relation oriented their action to a common set
of normative standards and value patterns’
(Scott, 1995/2001: 15, emphasis in original).
For Parsons, compliance to institutional
norms ‘is a need disposition in the actor’s
personality structure’ (1951: 37, cited by
Scott, 1995/2001: 12), where compliance is
motivated by the moral authority that institu-
tional norms exert over the individual. Actors
feel compelled to comply because refusal or
failure to do so results in feelings of anomie
and, at the extreme, mortification.
Critics of this (functionalist) conception of
institutionalization have argued persuasively
that it attributes ‘needs’ to actors which are
seemingly either unconditioned by processes
of institutionalization or unequivocally well
disposed to them. A widely canvassed remedy
for this limitation is to emphasize the role of
interests, instrumental action and/or rational
choice (Alexander, 1983; Silverman, 1970).
In this remedy we encounter an example of a
flip-flopping between (functional) structural-
ist and action-theoretic accounts of social
action. The dynamic of the flip-flop depends
upon each pole being simultaneously recog-
nized and denied as one or other side of
the dualisims privileged, and subsequently
found to be unbalanced by advocates of the
alternative pole. So, for example, Parsons’
systems-theoretic conceptualization of insti-
tutionalization is censured for assuming a
model of human action in which compliance
with moral authority is governed by the
 EXAMINING ‘INSTITUTIONALIZATION’: A CRITICAL THEORETIC PERSPECTIVE
‘need’ to internalize its order(s) rather than,
say, a calculation by agents that involves the
strategic development of, or identification
with, particular norms and values.
It is notable that mention of agency is
largely excluded from Meyer and Rowan’s
(1977/1991) classic paper where their rejection
of methodological individualism is clearly sig-
nalled in the definition of institutionalization:
Institutionalized rules are classifications built into
society as reciprocated typifications or interpreta-
tions (Berger and Luckmann, 1966: 54). Such rules
may be simply taken for granted or maybe sup-
ported by public opinion or the force of law ...
Institutionalization involves the process by which
social processes, obligations, or actualities come to
take on rule-like status in social thought and
action. (Meyer and Rowan, 1977/1991: 42)
Writing from the structuralist pole of the
dualism (see above), Meyer and Rowan omit
reference to actors’ orientations and also
exclude consideration of power in respect of
the conditions of institutionalization as well
as its consequences, possibly because they
equate the conceptualization of power with a
notion of one individual or group possessing
the power to secure their interests despite the
resistance of others.
The development of neo-institutional
theory has involved a rehabilitation of a
notion of agency (and power and interests) so
as to account for processes of change that, in
part at least, are attributed to the interven-
tions of powerful agents (e.g. institutional
entrepreneurs and social movements, see
especially DiMaggio, 1988). In order to fur-
ther develop and deepen our reflections on
institutionalization, we turn to Berger and
Luckmann’s The Social Construction of
Reality which has provided the theoretical
underpinning and legitimacy for much insti-
tutional theory (Gulrajani and Lok, 2005).
Institutionalization in ‘The social
construction of reality’
We begin by considering Scott’s reading of
Berger and Luckmann’s three moments in
677
the process of institutionalization, paying
particular attention to how ‘agency’ and
‘power’ are formulated in their thinking:
Externalization – the production, in social interac-
tion, of symbolic structures whose meaning comes
to be shared by participants [in particular social
worlds, e.g. the world of institutional theory];
Objectification – the process by which this produc-
tion ‘comes to confront him as a facticity outside of
himself’ as something ‘out there’, as a reality expe-
rienced in common with others [e.g. the ‘institu-
tionalisms’ to which Jepperson (1991: 144) refers].
And only then comes Internalization – the process
by which the objectivated world is ‘retrojected into
consciousness in the course of socialization. (Scott,
1995/2001: 40, emphases omitted and added,
citing Berger and Luckmann, 1966: 60–61)
The emphasis on ‘facticity’, ‘out there’, ‘out-
side of himself’ serves to counteract Parsons’
functionalist accent on the moment of inter-
nalization. On the other hand, Berger and
Luckmann account for institutionalization in
terms of ‘the important psychological gain’
(echoes of Parsons) that institutionalization
delivers as it narrows choices and ‘thereby
opens up a foreground for deliberation and
innovation’ (1966: 71). There is little or no
consideration of how, for example, the very
sense of agency emerges through processes
of institutionalization; or how, in Foucault’s
terms, human beings become subjectified as
they/we are made into subjects through par-
ticipation in such processes. Relatedly, there
is no appreciation of the ambivalence of the
‘gain’ secured by habitualization (see
Willmott, 1986). As a consequence, when
considering the ‘controlling character’
(Berger and Luckmann, 1966: 72) of institu-
tionalization, Berger and Luckmann under-
stand it as something that is ‘inherent’, and
not mediated by relations of power.
In conceiving of institutionalization as
occurring ‘whenever there is a reciprocal
typification of habitualized actions by types
of actors’ (1966: 72), Berger and Luckmann
assume an unforced reciprocity in processes
of habitualization which is based upon the
‘psychological gain’ enjoyed by all parties:
‘the most important gain is that each will be
able to predict the other’s actions’ (1966: 74).
678 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Institutionalization is thus represented as
universal and politically neutral. It is con-
ceived as universal in the sense that it has no
historical specificity: all forms of institution-
alization are deemed to be equivalent.
And it is politically neutral, if not amorally
conservative, in the sense that the (political)
conditions and consequences of institutional-
ization are excluded from its characteriza-
tion. As Berger (1988: 223) has commented,
those who read radicalism into his construc-
tionism laboured under a ‘profound misun-
derstanding’. Berger and Luckmann’s
understanding of social constructionism can
be applied as readily to slave plantations, for
example, as it can to movements for the
abolition of slavery without, in either case,
making reference to the oppressive or eman-
cipatory character of such institutions. There
is barely a gesture9 towards the possible
involvement of more or less powerful actors
in establishing and imposing typifications
that, over time, become habitualized and
reciprocated or, at least, complied with. Nor,
building on critical theorizing, is there
acknowledgment of the powerful, normaliz-
ing effects that all forms of institutionaliza-
tion – whether imposed or embraced – exert.
The reliance upon Berger and Luckmann
for theoretical inspiration and legitimation
combined with, at best, a loose coupling of
power and processes of institutionalization in
their thinking, helps to account for why
‘power’, let alone domination or oppression,
is so weakly theorized in new institutional
theory (see Perrow, 1985) and appears as
an ‘add-on’ in neo-institutional analysis.
As DiMaggio (1988: 3) comments, in some-
thing of an understatement, the presence and
significance of agency and power in institu-
tional theory is ‘somewhat obscure’.
They are obscured as a consequence of new
institutional theory’s consensualist, conser-
vative assumptions that are endorsed, if
not inspired, by Berger and Luckmann’s
conceptualization of institutionalization.
Consensualist analysis encounters a problem
when it comes to accounting for change,
at which point neo-institutional theorists
have endeavoured to rehabilitate agency (and
power) to counteract the determining force
attributed to institutional pressures by new
institutionalists. Doubting that change can be
adequately explained by functionalist fine-
tuning or endogenous shocks, neo-institu-
tionalists have flip-flopped in the direction of
other catalysts – such as (powerful) institu-
tional entrepreneurs or members of a social
movement – as agents of change.
Agency and institutionalization
Inspired by DiMaggio’s (1988) critique of
new institutional theory, neo-institutionalist
analysis is propelled by a taken-for-granted,
and thus unexamined, assumption that
‘agency’ must play some (important) part in
processes of de/institutionalization and, more
specifically, is a source of diversity or cre-
ativity that is productive of innovation and
change. A recurrent shortcoming of such
appeals to agency concerns their tendency to
overlook how ‘agency’ does not exist exter-
nally to, but is itself a powerful product of,
processes of institutionalization. This is evi-
dent when ‘agency’ (and ‘interests’ and
‘power’) are invoked by neo-institutionalists
to account for processes of institutionaliza-
tion and de-institutionalization without suffi-
cient attention being paid to the frameworks
that render their reality plausible and/or sup-
port their adoption as explanatory variables.
Even if, as DiMaggio contends, ‘interest
and group conflict’ is important for explain-
ing ‘the processes by which institutions
emerge, are reproduced, and erode’, it should
not be conceived as external to institutional-
ization. Unless a basic premise of institu-
tional theory is to be abandoned or at least
severely compromised, then ‘interests’ must
be conceived as identified, whether by agents
or their observers, through processes that
are institutionalized. The very claim that
‘behaviour is driven by, and understandable
in terms of, the interests of human actors’,
for example, is not self-evident but, rather,
an articulation of a particular institution that
 EXAMINING ‘INSTITUTIONALIZATION’: A CRITICAL THEORETIC PERSPECTIVE
asserts and legitimizes the credibility of such
claims. To put it another way, the claim is an
articulation of (hegemonic) power that oper-
ates to define the world in a distinctive way
(Friedland and Alford, 1991),10 to naturalize
and legitimate that which is institutionalized.
CRITICAL THEORY AND
NATURALIZATION OF THE PRESENT
Calling a theory ‘critical’ is, of course, a
provocation as it implies that other theories
are ‘uncritical’. Yet all theory develops in
relation to some other theory against which,
more or less overtly, it defines itself and takes
critical issue. We noted earlier how variants
of institutional theory have established their
claims by being critical of forms of
un-institutional (e.g. rational choice and con-
tingency) theory. To draw an authoritative or
stable distinction between theories that are
‘critical’ and others that are ‘uncritical’ is
untenable, not least because the sense and
significance of their meanings shifts over
time (the Appendix examines this issue in
relation to critical theory; the other contribu-
tions to this volume speak to the variety of
meanings of institutional theory).
The signifier ‘critical theory’ is not
restricted here to the Critical Theory of the
Frankfurt School such as Adorno, Marcuse,
and Habermas (Held, 1980) but, rather, is
invoked to signal forms of thinking that
provide a radical challenge to, as contrasted
with, an incremental refinement of, estab-
lished conventions of thought and practice,
with respect to their anticipated emancipa-
tory impetus or potential. Thus, a chief
target of critical theory is patterns of activity
which, in different ways, naturalize the pres-
ent – from Marx’s critique of political econ-
omy to Derridean deconstructionism. What
critical theories share is a (value-based) con-
cern to develop thinking with a practical
intent that may be broadly characterized as
‘aimed at decreasing domination and increas-
ing freedom’ (Stanford Encyclopaedia
679
<http:// plato,stanford.edu/entries/critical-
theory>).11 The de-naturalizing intent of
critical theories is generally motivated by
a value-oriented conviction that the principal
import of knowledge resides in problematiz-
ing conventional wisdoms and de-legitimizing
established institutions so as to foster and
facilitate emancipatory change (e.g. the
contribution of feminist knowledge to
identifying and challenging patriarchal
practices).
Consider, for example, how reference is
routinely or implicitly made to the ‘real
world’ without any acknowledgement of how
the ‘reality’ of this world is apprehended or,
better, constituted, from a particular, histori-
cally and culturally located, point of view. In
business textbooks and journal articles as
well as in the classroom, the ‘real world’
which is evoked is frequently, and more or
less explicitly, the one presumed by a point
of view attributed to senior management – a
view that tends to take for granted the neces-
sity of the status quo, the legitimacy of exec-
utives and academics privileged place
within it and the heroism of all engaged in
reproducing the system. This ignores a criti-
cal understanding of the present world as
divisive and destructive, where the relentless
expansion of capitalism is made possible, in
part, by its routine legitimation in social
science and business school education12
(in which institutional theory plays its part).
And yet, some residual, albeit barely
acknowledged, awareness of the selectivity,
limitations and self-serving rationalization
involved in bodies of knowledge, such as
those constructed in business schools, is
to be expected. Those engaged in reproduc-
ing and consuming bodies of knowledge
that naturalize the present ‘rarely experience
their oppressive character’, yet they ‘can
feel that burdensome weight if they dare
step outside the presuppositions of under-
standing and the sanctioned forms of
inference and presentation of “evidence” ’
(Barnett, 1997: 17). Taking this ‘step
outside’ is the invitation extended by
our exploration of institutional theory from
680 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
an alternative, critical theoretic standpoint.
Our intent is to develop a picture of institu-
tional theory less as an appealing and pros-
perous research programme, and more as an
exemplar of Kuhnian ‘normal science’ that
has contentedly settled down in the suburbia
of social theory (cf. Pollner, 1991). In
Kuhnian terms, we identify institutional
theory as a ‘puzzle-solving’ activity within a
given (i.e., institutionalized) framework
where any appetite for interrogating the
underlying tenets of the framework tends to
be marginalized or suppressed (Kuhn, 1970:
especially p. 35). It is precisely this appetite
that critical thinking stimulates and feeds as
it problematizes what it understands to have
become naturalized, excluded or glossed. As
we indicated earlier, our attentiveness to crit-
ical thinking is highly selective, being
restricted to a Foucauldian reading and cri-
tique of institutional theory. Accordingly, we
elaborate our understanding of Foucault’s
critical thinking in the following section
before applying it to examine a number of
key contributions to institutional theory.
FOUCAULT, POWER/KNOWLEDGE
AND CRITICAL THEORY
My role – and that is too emphatic a word – is to
show people that they are much freer than they
feel, that people accept as truth, as evidence,
some themes which have been built up at a certain
moment during history, and that this so-called evi-
dence can be criticized and destroyed. To change
something in the minds of people – that’s the role
of an intellectual. (Foucault, 1988: 10)
The directness of this quote suggests that
many critics of Foucault – who assert that his
approach is totalizing in its denial of subjec-
tivity or that he is relativist or nihilist – are
difficult to sustain. This is not to deny that his
writings are multifaceted and susceptible to
diverse readings.13 Amongst the themes that
recur in his writings are those on the nature
of rationality, the relationship between truth
and power and an examination of the dark
side of modernity. We focus largely on his
writing on power and subjectification, an
emphasis that Foucault (1983) himself retro-
spectively identifies as central. In contrast to
institutional theory, which points (ironically)
to the mythical quality of rationality without
subjecting it to critique, ‘Foucault questions
the rationality of post-Enlightenment society
by focusing on the ways in which many of
the enlightened practices of modernity pro-
gressively delimit rather than increase
the freedom of individuals and, thereby, per-
petuate social relations of inequality and
oppression’ (McNay, 1994: 2). McNay’s
observation on Foucault’s scepticism about
‘post-Enlightenment society’ and his atten-
tiveness to the ‘freedom of individuals’ as
well as ‘relations of inequality and oppres-
sion’ is indicative of a difference between his
position and that of many other critical theo-
rists (e.g. Frankfurt School); it also signals
what distinguishes his thinking on the signif-
icance of institutionalization. We consider
each of these in turn.
Many advocates of critical analysis (as
well as positivists) assume the possibility of
establishing foundational knowledge, either
by applying scientific methodology (e.g.
Bhaskar) or through counterfactual argumen-
tation (e.g. Habermas).14 And, of course, this
gets Foucauldians into trouble, as well as
others who lean in a non-foundationalist15
direction, such as liberals like Rorty, with
those wedded to some particularism which
they privilege as universalism – whether this
is spiritual or secular, or whether it is leftist
or rightist, in inspiration. Non-foundational-
ists regard the kinds of truth claims asserted
by foundationalists not only as elusive but,
when taken seriously, as potentially very
dangerous. Notably, they are seen to harbour
a misplaced assuredness about truths which,
at best, prop up the repressive/cynical toler-
ance of liberal pluralism and, at worst,
engender dogmatism and court the dangers
of totalitarianism. The rejoinder to the
assessment that, lacking any normative basis
for critique, non-foundationalism harbours
relativism and nihilism is that, ultimately, the
 EXAMINING ‘INSTITUTIONALIZATION’: A CRITICAL THEORETIC PERSPECTIVE
authority of foundationalist critique relies
upon self-referentiality with regard to (partic-
ular) assumptions and assertions about its
authority that can be supported only by refer-
ence to the very assumptions upon which it
relies. Acknowledging the limitations and
hazards of all forms of thinking, critical
thinking included, is, despite the lack of cer-
tainty, considered by anti-foundationalists to
be more defensible and/or to be of greater
social value than to claim or assume that there
is some independent or non-self-referential
basis for producing knowledge.
Non-foundationalism is a stance that takes
us away from the quest for transcendental or
normative criteria that aspire to provide the
definitive identification of what, for example,
is (essentially) oppressive or emancipatory.
Turning away from this alluring but treacher-
ous fantasy, we are obliged to face up to our
reliance upon whatever ‘standards of ration-
ality and justice are available to us within the
specific contexts in which we find ourselves’
(Sawicki, 1994: 352). Such standards are not
regarded as hopelessly flawed or useless in
relation to some higher ideal. Rather, their
(limited) value and their (inherent) ‘danger-
ousness’ is recognized (Foucault, 1984: 343).
As Dreyfus and Rabinow (1986: 118) assess
Foucault’s stance, it ‘has never been to
denounce power per se nor to propound truth
but to use his analysis to shed light on the
specific dangers that each specific type of
power/knowledge produces’. What, for
Foucault is uniquely dangerous about moder-
nity is that ‘everything becomes a target for
normalization’ (Hiley, 1988: 103). Such nor-
malization, we argue, includes the study of
institutionalization.
Turning now to the question of Foucault’s
distinctive position on the nature and signifi-
cance of rationality and institutionalization,
we first note that, for institutional theorists,
human action is infused by value in the form
of ‘social entanglements and commitments’
(Selznick, 1992: 232), the implication being
that rationality is a myth, at least to the extent
that this infusion is unacknowledged (e.g. in
rational choice theory). The (institutionalized)
681
idea of rationality is identified as a normative
imperative with which modern organizations
and their members conform to ‘increase their
legitimacy and survival prospects’ (Meyer
and Rowan, 1977/1991: 41). However, in
institutional theory, this problematizing of
rationality is not connected to (ethical) issues
(e.g. of freedom). Rather, the study of ration-
ality is linked to questions of the (scientific)
adequacy of forms of explanation. In Meyer
and Rowan’s case, their analysis concludes
with three testable hypotheses. Likewise,
DiMaggio and Powell (1983: 154) assess
‘the ultimate value’ of their work in terms of
its ‘predictive utility’ and present a series of
hypotheses for empirical testing. In each
case, the theory-laden nature of empirical
findings collection/construction is unac-
knowledged. A perspective that is latently
normative (the value of predictive science) is
presented as descriptive or positive.
In Foucault’s study of rationality, the focus
is on its ethical significance, not its status as
a variable in the development of an empiri-
cal-analytic science of prediction and con-
trol. His focus is on what, loosely, may be
termed the institutionalization and reproduc-
tion of ‘inequality and oppression’ (McNay,
1994: 2) that takes the form of routine and
ambivalent subjectification as well as more
overt and unequivocal subjection. There is no
(scientistic) assumption or pretence that
some objective measure of ‘inequality and
oppression’ can be devised and applied.
Instead, all truth claims, including those of
institutional theory, are understood to be
embedded in, and subject to, evaluation by
relations of power-knowledge; and it is
within the specificity of these relations that
their meaning and significance is fashioned.
Taking this stance, it would be inconsistent to
discredit as bogus or incorrect forms of
power-knowledge that ascribe truth to the
findings of an empirical-analytical concep-
tion of science preoccupied with hypothesis
testing. Instead, Foucault’s approach com-
mends critical reflection upon the particular
(institutionalized) basis upon which seem-
ingly authoritative, universal claims are
682 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
founded; and it advocates close attentiveness
to the (political) effects of believing such
knowledge to be true.
Power: juridical and disciplinary
A significant area in which Foucault has
opened up epistemological space is in the
study of power where he challenges the nat-
uralization of a view of power that conceives
of it as possessed by unitary, ‘sovereign’
political (individual or collective) agents
(Foucault, 1977, 1979a, 1979b, 1980). So
doing, Foucault does not deny, or seek to
invalidate, the force of what he characterizes
as the ‘juridical’ conception of power (see
Foucault, 1979a: especially p. 7 and 1994:
especially p. 42 et seq). After all, he makes
no assumption that power has an essence
which conventional wisdom fails to mirror;
instead, he problematizes its exclusivity by
posing an alternative to the established,
juridical view.16 That is, additionally, he
invites us to conceive of power as productive
of extensive, subjectifying processes of nor-
malization – which he associates with the
development of modern organizations and
which he also understands to be ‘embodied
in the background of everyday practices’
(Dreyfus, 2004). Foucault’s interest is not
primarily directed at the expression of power
in its most central and institutionalized forms
such as state apparatuses or class relations.
Rather, he is concerned to examine how
power relations of inequality and oppression
are created and maintained in more subtle
and diffuse ways through ostensibly humane
and freely adopted social practices. These
subtle practices can be deeply institutional-
ized and taken for granted. In modern organ-
izations, such as factories, offices and state
agencies, a juridical form of power exercised
from above is seen to depend upon, promote
and even be displaced by a ‘disciplinary’
form of power that objectifies and institu-
tionalizes social reality through processes of
normalization and subjectification. It is this
shift in the conceptualization and analysis of
power that underpins the assessment
that ‘Perhaps no writer of the last half cen-
tury has done more to illuminate the nature
of power than Michel Foucault’ (Wolin,
1988: 179).
For Foucault, there are two related kinds
of normalizing power: ‘disciplinary power’
and ‘bio-power’. ‘Bio-power’ is at work in
the subjugation of human bodies; and the
control of populations by making clear what
is ‘normal’ and what is not. Normalizing
effects are articulated through discursive for-
mations such as psychiatry, medicine, man-
agement and social work. ‘Disciplinary
power’ renders specific individuals or groups
of people orderly and regimented through the
development and use of technologies of
assessment and surveillance – technologies
that became widely disseminated through
organizations and institutions. Disciplinary
power is conceived to operate ‘through
a multiplicity of organisms, forces, energies,
materials, desires, thoughts, etc.’ (Foucault,
1994: 35). Such power, Foucault contends,
‘must be analysed as something which
circulates ... It is never localized here or
there, never in anybody’s hands, never
appropriated as a commodity or piece of
wealth. Power is employed and exercised
through a netlike organization’ (Foucault,
1994: 36). Moreover, disciplinary power
is not exclusively negative or zero-sum; it is
productive, not just repressive; it is diffuse
and relational. It is also subjectifying,
inasmuch that it constitutes subjects as
individuals:
power produces; it produces reality; it produces
domains of objects and rituals of truth. The individ-
ual and the knowledge that may be gained of him
belong to this production. (Foucault, 1984: 204–5,
emphasis added).
Amongst these ‘domains of objects’ is the
sense of agency attributed to, and demon-
strated by, subjects. This could imply that
Foucault’s concept of subjectification is
equivalent to the more established, sociolog-
ical idea of socialization. But this is to jump
to an unsupportable conclusion, as Dreyfus
(2004) observes,
 EXAMINING ‘INSTITUTIONALIZATION’: A CRITICAL THEORETIC PERSPECTIVE
Socialization into norms is the universal way the
understanding of being or power governs the
actions of the members of any society. .... how-
ever, norms are progressively brought to bear on
‘all aspects of life’... normalization works directly
through new sorts of invisible, continuous prac-
tices of control Foucault calls micro-practices ...
disciplinary power works meticulously by ordering
every detail. So, while for Foucault all forms of
power are bottom up and the understanding of
power as monarchical misses this important fact,
nonetheless bio-power is bottom-up in a new and
dangerously totalizing way, so that understanding
power on the model of the power of the ruler
covers up an important change in how our prac-
tices are working.
Crucially, knowledge and power do not exist
independently of each other:
there is no power relation without the correlative
constitution of a field of knowledge, nor any
knowledge that does not presuppose or constitute
at the same time power relations ... it is not the
activity of the subject of knowledge that produces
a corpus of knowledge, useful or resistant to
power, but power/knowledge, the processes and
struggles that traverse it and of which it is made
up, that determines the forms and possible
domains of knowledge. (Foucault, 1977: 27–28)
Foucault draws us towards analysis that
strives to appreciate the terms, and more
especially, the effects, of particular dis-
courses with regard to how they articulate
and sustain a ‘regime of truth’ such that a
particular ‘object of discourse’, or social
objectivity, is successfully institutionalized.
Foucault’s attentiveness to power/knowledge
explores how it is productive of subjects who
are normalized through the operation of
‘micro-practices’ that regulate numerous
aspects of their/our everyday lives.
Technologies of power (that include manage-
ment practices such as accounting and infor-
mation systems) not only aspire to identify,
monitor and control numerous aspects of life,
but, crucially, provide a seductive regime of
truth for governing subjects who come to
comply with its disciplinary logic.
Yet, for Foucault, the effect of power’s
operation is by no means totalizing as it oper-
ates upon recalcitrant material (humans) – as,
for example, when the ‘objects’ of discipli-
nary technologies respond by ‘gaming the
683
system’ or simply refusing to act in a respon-
sive, disciplined manner. As Foucault (1978:
95) puts it, ‘where there is power, there is
resistance’. Exercises of power are therefore
endemically vulnerable to both overt and
covert resistance that challenges, and may
ultimately displace, its ‘truth’. The effects of
juridical as well as disciplinary power
are indeterminate as they are contingent upon
its dispersed targets – the ‘individual or
collective subjects who are faced with a field
of possibilities in which several ways of
behaving, several reactions and diverse com-
portments may be realized’ (Ezzamel,
1994: 221).
We have noted how both ‘old’ and ‘neo’
versions of institutional theory incorporate
elements of a juridical, top-down conception
of power as they invoke notions of agency
and interests to account for processes of
de/institutionalization. There is, however, no
equivalent to ‘disciplinary power’ in institu-
tional theory. This is not entirely surprising
as a focus upon subjectification is far
removed from the normal science value-ori-
entation of institutional theory which focuses
upon ‘enduring elements of social life’, such
as ‘logics’ (Lawrence and Suddaby, 2006:
215) rather than the particularity of their sub-
jectifying effects17 (but see Lok, 2007 and
Khan, Munir and Willmott, 2007 for exam-
ples of how Foucauldian thinking may be
introduced into the examination of processes,
e.g. institutional entrepreneurship typically
studied by institutional theorists).
Power and subjectification
To recap, what institutional theorists charac-
terize as ‘institutionalization’ can alterna-
tively be understood from a more critical,
Foucauldian standpoint as ‘normalization’,
where human beings become bound to the
identities to which they/we are subjected.
Foucault is distinctly attentive to the discipli-
nary processes through which subjects are
constituted as an effect of participation in
social institutions, as contrasted to the
684 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
(juridical) establishment and enactments of
sovereignty by one group over another.
Notably, when discussing how the human
sciences have developed alongside
power/knowledge technologies invested in
disciplinary institutions (the prison, the fac-
tory, the school, etc.), Foucault (1979b: 305)
links power with the subject, and draws
attention to specific forms (modalities) of
power:
a certain policy of the body, a certain way of ren-
dering the group of men docile and useful. This
policy required the involvement of definite rela-
tions of knowledge in relations of power; it called
for a technique of overlapping subjection and
objectification; it brought with it new procedures
of individualization. ... Knowable man (soul, indi-
viduality, consciousness, conduct, whatever it is
called) is the object-effect of this analytic invest-
ment, of this domination-observation.
In everyday activities and routines, normaliz-
ing power constitutes subjects as agents to
whom sovereignty is attributed as a ‘natural
entity’, and to which interests are also
ascribed. Such discourse produces a sense of
self as a centred, autonomous decision-
maker as well as self-affirming beliefs about
the location of power – either as a possession
of subjects (agency) or as an enabling/dis-
abling constraint on agency (structure). In his
later works. Foucault turned his attention
more directly to strategies of resistance and
the production of alternative discourses
whose aim is to challenge dominant dis-
courses of power, including technologies of
self (Foucault, 1988), at a particular juncture
in time and space (see also McWhorter,
1999). Power is conceptualized as a network
of relations, rather than as juridical or sover-
eign. The effects of its operation are con-
ceived as ambivalent and unpredictable but
also potentially ‘dangerous’ as they are
appealing, yet can have unintended, malig-
nant as well as beneficial consequences.
These effects include the ambivalent capaci-
ties of agency in which subjects become
absorbed: ‘all subjectifying power endows
subjects with some capacities required to
be agents, even when it is oppressive’
(Simons, 1995: 82). For Foucault, institu-
tions are not benign; nor are they mere objects
of analysis; they are mobile complexes of
juridical and disciplinary power. Disciplinary
mechanisms have power effects as they sort,
rank, homogenize, differentiate, individualize,
and produce the rules that are at once both
inclusive and exclusive of populations of indi-
viduals. Foucault is attentive to the productive
and insidious effects of power, and to the
resistance that discloses the limits of power.
To recap key elements of our argument,
we have identified institutional theory’s con-
ceptualization of institutionalization as
preoccupied with explanation rather than
emancipation, and as methodologically col-
lectivist and tendentially consensualist with a
tendency to revert to methodological individ-
ualism, where change is attributed to wilful
agency that is in possession of some kind of
power. A key difference between Foucault’s
approach to the study of power and that of
institutional theorists is the central concern to
highlight the operation of unacknowledged
processes of domination and oppression in
the guise of normalization and subjectifica-
tion. In Foucauldian analysis, power, con-
ceived as disciplinary as well as juridical, is
not treated as a ‘bolt on’; and agency/struc-
ture dualism is problematized by understand-
ing it as a naturalized product of a particular
power/knowledge complex that frames so
much ‘normal’ social scientific discourse.
With a few exceptions (e.g. Knights, 1992;
Townley, 1993; Ezzamel and Willmott,
1998), the important Foucauldian insights
discussed above have hardly received any
attention in the mainstream organization liter-
ature. By way of illustrating the contribution
that Foucault’s work can offer to organization
studies we briefly discuss the work of
Knights and Townley, and refer to less well-
known, critical literature.
Knights (1992: 515) draws on Foucault’s
work to disrupt ‘knowledges that are built on
representations deeming to reflect reality’.
Examining the study of strategy from a
Foucauldian standpoint, Knights notes how
positivistic studies of strategy objectify
 EXAMINING ‘INSTITUTIONALIZATION’: A CRITICAL THEORETIC PERSPECTIVE
businesses and their practices, whilst being
‘oblivious to how their representations actu-
ally constitute the subjectivity of manage-
ment, as practitioners draw upon these studies
in their exercise of power’ (Knights, 1992:
523) such that particular features of strategic
discourse could be self-fulfilling in their
effects. Knights (1992: 529) emphasizes the
constitutive power of discourse by arguing
that ‘strategic discourse and practice repre-
sent a set of power-knowledge relations that
constitutes the subjectivity of managers and
employees’.
Townley (1993) draws on Foucault to
present human resource management (HRM)
as ‘the construction and production of knowl-
edge’, and as a way of ‘rendering organiza-
tions and their participants calculable arenas,
offering, through a variety of technologies,
the means by which activities and individuals
become knowable and governable’ (1993:
526, original emphasis). She shows how the
disciplinary technologies of HRM govern
populations of employees, in particular the
distribution of individuals into work space,
their spatial enclosure, their partitioning from
each other, their ordering into hierarchical
positions, as well as the use of temporal
(timetable) examination, and confessional
technologies to construct the subjectivity of
employees and to render them calculable,
analyzable and governable. Townley (1995)
extends this analysis to examine the discipli-
nary effects of technologies of accounting
and performance measurement. Her work has
been developed by Covaleski, Dirsmith,
Heian and Samuel (1998) in their Foucaudian
examination of HRM practices in accounting
firms, by Ezzamel and Willmott (1998) in
their examination of teamwork in manufac-
turing, and by Grey (1994) in his analysis of
the disciplinary effects of conceiving one’s
work as a ‘career’.
There has also been considerable research
using Foucaudian concerns about the disci-
plinary power of management practices such
as accounting. Notably, Miller and O’Leary
(1987) conduct an historical analysis to show
how scientific management and standard
685
costing produced ‘governable persons’.
Hoskin and Macve (1988) and Carmona et al.
(2002) similarly use historical methods to
show how the inter-connection between
power and knowledge produced modern
conceptions of management. Field research
as diverse as Knights and Collinson (1987),
Preston, Cooper and Coombs (1992) and
Ezzamel, Lilley and Willmott (2004) illus-
trate the insights derived by examining
disciplinary processes of subjectification and
the construction of specific conceptions
of organization and management. Finally,
the empirical studies of Haigh (2006),
Preston, Cooper, Scarbrough and Chilton
(1995) and Kosmala MacLullich (2003)
indicate how the analysis of normalization
can be applied to investment, ethical and
audit practices.
Space limitations do not permit us to
engage with these illustrations in more detail,
nor to comment on the extent to which we
endorse their readings of Foucault. Rather,
their work is cited here as examples of how
Foucault’s work can be usefully extended to
areas of organization studies as an alternative
way of seeing, rather than as a replacement
or corrective, to other research approaches.
In the following section, we examine in some
detail some of the recent attempts made in
the organizational literature to refine institu-
tional theory and comment on the extent to
which such attempts are commensurate with
our reading of Foucault’s work.
THE LIMITS OF REFINING
INSTITUTIONAL THEORY
We now apply our reflections on institutional
theory, critical thinking and Foucauldian
analysis – to consider the interventions by
advocates of institutional theory who have
pointed to, and proposed ways of overcom-
ing, its limitations. Initially, we elaborate and
support our claim that neo-institutionalist
analysis relies upon deinstitutionalized con-
ceptions of agency and related, juridical
686 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
understanding of power. We then examine
some examples of how critical thinking,
including Foucauldian ideas, has been intro-
duced into institutional analysis.
Incorporating agency, interest and
power? DiMaggio, Oliver, Meyer
and Jepperson
Amongst the more influential reformers of
institutional theory are DiMaggio (1988) and
Oliver (1991; 1992). DiMaggio (1988: 3)
calls for incorporating ‘the role of interest
and agency’ as a corrective to an analysis
‘predicated on the assumption, often
implicit, that persons and organizations hold,
and act on, universal interests in survival and
in the reduction of uncertainty’. Oliver
(1991) follows this lead as she commends
resource dependency theory in order to pay
‘attention to the role of organizational self-
interests and active agency in organizational
responses to institutional pressures and
expectations’ (1991: 45). The intent of these
interventions is to acknowledge and under-
stand how ‘institutionalization is a product of
the political efforts of actors to accomplish
their ends’ (DiMaggio, 1988: 13), with a
view to extending the capability and reach of
institutional theory in relation to its study of
‘strategic responses to the institutional envi-
ronment’ (Oliver, 1991: 151).
Revisions to institutional theory that
attribute change to the agency of actors
depart, as DiMaggio (1988: 11) notes, from
the understanding that institutional and inter-
est-based frameworks are incommensurable
or ‘antagonistic’ – a position which, for both
him and Oliver, is seen to impede ‘the devel-
opment of a more comprehensive theoretical
apparatus’ (1988). Such revisions are intro-
duced as a remedy for what is regarded as the
restrictive capacity of institutional theory ‘to
develop predictive and persuasive accounts
of the origins, reproduction, and erosion of
institutionalized processes’ (1988, emphasis
added). In a similar vein, Oliver approvingly
quotes resource dependency theorists who
‘argue that organizational stability is
achieved through the exercise of power, con-
trol, or the negotiations of interdependencies
for purposes of achieving a predictable or
stable inflow of vital resources and reducing
environmental uncertainty’ (1991: 149,
emphasis added). In this turn to agency,
exemplified in the work of both DiMaggio
and Oliver, power is conceived as a posses-
sion of agents which, when operationalized,
is seen to render behaviour more predictable
and thereby attenuate uncertainy. This orien-
tation differs markedly from Foucault’s nor-
malizing conception of power as a network
of relations whose outcome is indeterminate.
In commenting upon this turn to the role of
‘agency’ in the exercise of power, we focus
upon two related issues. First, the compati-
bility of its methodologically individualistic
conceptualization of action with the founda-
tional assumptions of institutional theory;
and, secondly, the focus upon a juridical con-
ception of power to the exclusion of other
concepts of power, such as those articulated
by Foucault.
As Friedland and Alford (1991) incisively
point out, DiMaggio’s proposal to correct
the ‘defocalization of interest and agency’
(1991: 3) assumes a ‘materialist-idealist
dualism’. This dualism is evident, for
example, in the view ‘that actors have objec-
tive interests, which can be understood inde-
pendently of the actors’ understandings’
(1991: 244) and to which, presumably, social
scientists have privileged knowledge and
access. In such formulations, agency appears
to exist externally to, and to operate in
some measure outside of, processes of insti-
tutionalization. Thus, DiMaggio asserts that
‘there is much about the processes by which
institutions emerge, are reproduced, and
erode, that cannot be explained without ref-
erence to interest and agency’ (1988: 3). In
DiMaggio’s rehabilitation of agency within
institutional theory, actors are susceptible to
the influence of institutions only when their
real interests are adequately catered for, or
are recognized by them.18 Oliver (1991) is
less explicit about her conception of agency,
 EXAMINING ‘INSTITUTIONALIZATION’: A CRITICAL THEORETIC PERSPECTIVE
although in drawing upon resource depend-
ency theory, she relies on a juridical concep-
tion of power: she does not conceive of the
organization, the environment, or, indeed, the
perspective that differentiates them, as artic-
ulations of power in the manner suggested by
Foucault. The power attributed to organiza-
tions appears to develop and be exercised
independently of the institutional framework
and processes through which organizational
practices are enacted. These are the taken-
for-granted ‘context’ against which power is
exercised by actors pursuing their interests.
In short, a basic limitation of both
DiMaggio’s and Oliver’s theoretical posi-
tions is their ‘institution-free conception of
interest and power’ (Friedland and Alford,
1991: 244). The materialist-idealist dualism
effectively ‘defocalizes’ (using DiMaggio’s
terminology), processes of institutionaliza-
tion with respect to both what the signifier
‘interests’ (and ‘agency’ and ‘power’)
is intended to describe (its referent) and to
what it signifies (see Hirschman, 1986, cited
in Friedland and Alford). Put bluntly, there is
a lurch to methodological individualism
where institutional entrepreneurs somehow
evade or ‘escape the rules, routines, and
norms of institutional fields’ (Levy and Egan,
2003: 811).
In pointing to this example of structure-
agency flip-flopping in neo-institutional
theory, we stress that DiMaggio’s and
Oliver’s proposed refinements seek to avoid
deficiencies attributed to (new) institutional
theory, but suggest that their analysis resem-
bles a version of action theory rather than
one that is institutionalist. Their conceptual-
ization of power, self-interest and politics
highlights our earlier observations about the
conservative value-orientation of institu-
tional theory. For, despite Oliver’s character-
ization of interests as ‘political’ (1991: 147),
she treats politics as synonymous with bar-
gaining, where the substance or issues being
bargained over are regarded as an ethically
irrelevant feature of institutionalization.
Reliance on a juridical view of power, to
the exclusion of bio-power and disciplinary
687
power, is also evident in more recent work,
where change is seen as a problem that is
‘solved’ by identifying the agents who ‘must’
possess power to change things – institutional
entrepreneurs or social movements. These
‘powerful’ agents are said to establish some-
thing that does not simply reproduce what
already exists (Suddaby and Greenwood,
2005), but whose ethical or political properties
are irrelevant to such analysis. This approach
exemplifies a mode of knowledge production
which aspires to capture, order, and reorder
such ‘objects’. Such (power-) knowledge
enhances the position of comparative sover-
eignty of a certain class of actors (e.g. man-
agers, technocrats) in identifying ‘better’
(from their perspective) strategic responses
to institutional pressures. A Foucauldian
response to this endeavour is not necessarily
to deny the potential benefits of prediction
and managerialism, per se, but rather to
emphasise that belief in the possibility of pre-
dicting the outcome of power is conditional
upon the exclusion of a conceptualization of
power as a network of relations, or problema-
tizing the ethical rights of managers.
Turning to the work of Meyer and Jepperson
(2000), they valuably remind us that the mean-
ing and significance of terms such as agency
and interests is neither self-evident nor intransi-
tive. Rather, such terms are articulations of a
cultural system in which ‘the modern actor [is
constructed] as an authorized agent for various
interests via an ongoing relocation into society
of agency originally located in transcendental
authority’ (2000: 100). Meyer and Jepperson
effectively admonish those who appeal to
agency or interests – for example, in order to
explain processes of institutionalization – when
the appeal to agency fails to recognize how any
conception of agency relies on a set of ‘precon-
scious understandings’ (DiMaggio, 1988: 3)
that modern actors come to acquire and broadly
share. This critique is subtly articulated when
Meyer and Jepperson deconstruct the taken for
grantedness of agency and ‘agenticness’ in so
much social and organization theory:
Most social theory has recognized one way or
another that core social entities have been more
688 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
elaborately constructed over time. The agentic
aspect and its underlying spiritual devolution is less
well recognized. Modern individuals, organizations,
and nation-states, in becoming legitimated agents
for their underlying interests, incorporate the highly
standardizing responsibility to enact imagined
moral and natural principles. The proper, modern
agentic individual, for instance, manages a life, car-
rying a responsibility not only to reflect self-interest
but also the wider rationalized rules conferring
agency ... Modern agentic actors involve them-
selves in all sorts of efforts elaborating their
agentic capabilities. (2000: 107, emphasis added)
Here we have a strong and timely reassertion
of the distinctive, central idea of institutional
theory that the key to understanding human
behaviour is the manner and process of its
institutionalization. They recall that the
‘proper, modern, agentic individual’ is a
product of a particular institution that consti-
tutes and legitimizes their/our sense of
agency and associated responsibility for the
enactment of ‘imagined moral and natural
principles’ (2000), including the seeming
naturalness of self-interest and the preoccu-
pation with its preservation and pursuit.
Given that Meyer and Jepperson question
the way in which agency has been attended
to in institutional theory, it is disappointing
that, despite their observations on modern
actorhood – which they helpfully associate
with ‘European efforts’ and particularly with
Foucault’s emphasis on how specific features
of actorhood are generated by specific insti-
tutional structures (2000: 102, note 3) – they
pay no attention to Foucault’s thinking on
power and knowledge. One way to interpret
this silence is to understand their analysis as
a sophisticated restatement of an established
conservative conception of institutional
theory. What, in neo-institutionalist analysis,
appears to escape the operation of institution-
alization is understood by Meyer and
Jepperson to be a product of ‘deeply held,
unexamined logics’ that currently form the
framework ‘within which reasoning takes
place’ (Horn, 1983: cited by Suddaby and
Greenwood, 2005: 37).
Meyer and Jepperson’s (2000) argument
is a potent rejoinder to those who contend
that agency, for example, is external to,
and operates in some measure outside of,
processes of institutionalization. But
Meyer and Jepperson have virtually nothing
to say about power or hegemony, and in
this sense their contribution is radically
conservative in the tradition of Berger and
Luckmann (1966).
From agency to contradiction?
Seo and Creed
Seo and Creed (2002) take up and amplify
Meyer and Rowan’s observation (1977/1991)
that gaining legitimacy by conforming to
prevailing logics within the institutional field
can be damaging for efficiency and social
reproduction, notwithstanding possibilities
for a loose coupling between logics and
action. They formulate this insight as contra-
dictions in a way that builds upon Friedland
and Alford’s (1991) thesis that contemporary
Western societies are organized on, and
through, diverse and contradictory logics,
such as those of capitalist enterprise, family
values, democratic principles, etc. They
argue that it is disjunctures within and
between these logics that prompt agents to
act in ways that produce change.
Seo and Creed’s (2002) work engages
directly with critical theory which, as they
note, ‘raises concerns about the possibilities
of dominance and alienation in the processes
of institutionalization that are seldom dis-
cussed in the managerialist treatments of
institutional phenomena’ (2002: 241). They
also observe that institutional theory, in con-
trast, ‘treats rules, logics of action, and insti-
tutionalized patterns of behaviour ... as
something neutrally embedded within
people’s cognitions and/or as external givens
of the broader society’ (2002). This assess-
ment echoes our earlier reflections on
the divergent value-orientations of critical
and institutional theory, and our comments
on the latter’s consensualist and conservative
leanings.
 EXAMINING ‘INSTITUTIONALIZATION’: A CRITICAL THEORETIC PERSPECTIVE
To explore the operation and significance
of contradictions for analyzing change, Seo
and Creed commend a dialectical version of
critical theory (Benson, 1977). But they
simultaneously cling to a neo-institutionalist,
juridical conception of agency and power.
Processes of institutionalization are under-
stood to involve ‘political struggle involving
various participants who have divergent
interests and unequal power’ (2002: 229,
emphasis added). A juridical attribution of
power is assumed that excludes considera-
tion of its hegemonic and net-like operation.
Echoing DiMaggio (1988), they contend that
change is instigated by agents when their
‘ideas and interests are not adequately served
by the existing social arrangements’ (2002:
229). Such ideas and interests are presented
as ‘givens’ that are self-evidently in a relation
of more or less tension with ‘given’ social
arrangements. There is no consideration of
how the identification of interests, or of the
‘needs’ that are ‘unmet’ (2002: 229), or the
assessment of existing arrangements is medi-
ated by (contradictory) processes of institu-
tionalization.
Seo and Creed’s contribution to the refine-
ment of institutional theory usefully points
towards contradictory, rather than simply
competing, forms of institutionalization.
Perversely, their use of critical theory to pro-
vide an explanation of change directly con-
tradicts what they initially identify as ‘one of
the most central assertions in institutional
theory – that actors and their interests are
institutionally constructed’ (2002: 222–3,
emphasis added). Seo and Creed’s ‘dialecti-
cal perspective’ aspires to show how contra-
dictions in and between institutional
arrangements induce the realization of trans-
formative agency such that agents’ latent
interests are expressed through processes of
institutional change. While this is a com-
mendable attempt to address the paradox of
embedded agency, Seo and Creed fall back
on essentialist, or at least de-institutional-
ized, notions of ‘need’ and ‘interests’ in their
conception of agency that are somehow
transcendent of their institutional(ized)
689
formation and identification involving
processes characterized by Foucault as
subjectification.
Foucault at last? Lawrence, Winn
and Jennings
The distinctive way in which Foucault con-
nects the exercise of disciplinary power to
the process of subjectification is central to
Lawrence et al.’s (2001) examination of ‘the
set of power relations that support the
process [of institutionalization]’ (2001: 629).
As they put it, ‘the power of discipline ... pro-
vide(s) the basis for agency in the form of
identity’ (2001: 636). Identity is understood
to precede agency, and is not theorized as
something that is chosen by (autonomous)
agents. Contrasting disciplinary power with
‘influence’, which is conceived as being con-
cerned with ‘shaping a subject’s actions’
(2001: 636), processes of institutionalization
governed by disciplinary power are under-
stood to ‘shap(e) the actual formation of the
subject’ (2001: 636) and to be involved in ‘the
constitution of their targets’ subjectivity’
(2001: 636). While this is useful, precisely
what is involved in such ‘constitution’
receives no attention beyond a cursory and
descriptive reference to Foucault’s observa-
tions concerning the role of hierarchical
observation, normalizing judgement and
examination in ‘maintaining power relations’
(2001: 636) through the shaping of subjects’
formation. Their relevance of these observa-
tions for developing an alternative view of the
nature and significance of institutionalization
is unexplored. Instead, Foucault’s ‘disciplinary
power’ is taken up to analyze the temporal
dimension of institutionalization processes.
More specifically, ideas drawn from
Foucault’s Discipline and Punish (1977) are
deployed to populate one cell within a 2 x 2
typology of power-centred mechanisms of
institutionalization, which is distinguished
by its generation of comparatively slow and
stable processes of institutionalization (see
fig. 2, p. 630 and Propositions 3a and 3b).
690 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Lawrence et al. (2001) claim that modes of
power target either ‘subjects’ or ‘objects’
when, arguably, it is always subjects that are
targeted and subjectified by discipline, even
when their subjectivity is disregarded (as in
the case of the power-knowledge effects of
actuarial tables or standard costs). From a
Foucauldian perspective, actors rarely have
‘no choice’ (2001: 631), as Lawrence et al.
contend. Disciplinary power is not distin-
guished from juridical power by the attribu-
tion of choice to those who are subjectified
by it. It may be the case, as Simon (1988)
contends, that ‘Where power once sought to
manipulate the choice of rational actors, it
now seeks to predict behaviour and situate
subjects according to the risks they pose’
(1988: 772, cited by Lawrence et al., 2001:
637). But, as we argued earlier, this does not
exclude consideration of the ways in which
subjects become knowledgeable about such
changes and seek to resist them.
Frustratingly, what we encounter in
Lawrence et al.’s application of Foucault’s
thinking is an example of how, in the lan-
guage of institutional theory, rhetoric is
deployed [by academic entrepreneurs] to
accommodate and align some new ideas [in
this case, Foucauldian ideas] to an estab-
lished, taken-for-granted mode of compre-
hensibility (see Suchman, 1995; Suddaby and
Greenwood, 2005) that strips Foucauldian
critical theory of some of its most provocative
and original insights. Their domestication
of critical thinking is brought home in the
concluding section of their article where it is
conjectured that contemporary processes of
rationalization ‘involve a movement away
from institutionalization through influence
and force and towards discipline and domina-
tion’ (Lawrence et al., 2001: 641) without
connecting this development to processes of
subjectification.19 Moreover, the implications
of this shift for researching institutionaliza-
tion are framed not in terms of the effects of a
putative shift to discipline and domination on
subjects but, rather, in a neo-positivist con-
cern with the question of the ‘resources or
abilities ... needed on the part of agents to
employ each of the four types of institutional
mechanisms’ (2001: 641). In short, it is busi-
ness as usual for institutional theory.
CONCLUDING REMARKS
Our reflections on ‘Examining Institutional-
ization’ are premised on the understanding
that accounts of the world generated by insti-
tutional theory and critical theory are contin-
gent upon the value-orientations in which
they are embedded. We have pointed to some
limits of institutional theory, not with a view
to correcting or enhancing it but, rather, to
show how it articulates a particular, value-
oriented form of power/knowledge; and,
relatedly, to suggest that it does not have a
monopoly of truth over the nature and signif-
icance of institutionalization.
We have argued that institutional theory
understands institutionalization as a univer-
sal and politically neutral process, albeit one
where juridical conceptions of ‘agency’,
‘power’ and ‘interests’ are increasingly
invoked to account for the emergence or
demise of institutions. Even though institu-
tional analysis conceives of organizations as
value-imbued human constructions, rather
than as impersonal, rational entities, its focus
is on how institutions constrain and facilitate
organizational forms and practices, and not
upon how institutions, dominate and oppress
as they subjectify human beings. It is guided
by a conception of knowledge production in
which there is a (positivist) emphasis upon
prediction and control, as manifest in a pre-
occupation with the identification and meas-
urement of variables, including the power
attributed to agents, that are deemed to pro-
vide a more complete explanation of how
organizational forms converge and change.
Institutional theory, we contend, is institu-
tionalized within a tradition of normal sci-
ence which assumes an incrementalist and
imperialist conception of theory develop-
ment, inspired by the belief that it should be
possible to devise one, single, universally
 EXAMINING ‘INSTITUTIONALIZATION’: A CRITICAL THEORETIC PERSPECTIVE
valid theory that successfully incorporates
and integrates every possible relevant
element.
The particular value-orientation that pro-
pels and legitimizes critical theory, in con-
trast, produces knowledge that aims to
‘denaturalize the present’, and thereby
prompt and facilitate processes of emancipa-
tion.20 Consistent with this impulse, we have
engaged critical theory to problematize the
institutionalization of institutional analysis
rather than to revise or replace its distinctive
power/knowledge framing of institutional-
ization. Specifically, we have suggested the
relevance of Foucault’s discussions of disci-
plinary forms of power and processes of sub-
jectification for thinking critically about how
to study institutionalization.
In applying a critical, Foucauldian, read-
ing to the central tenets and some key texts of
institutional theory our position is that there
is nothing inherently unacceptable about
defining and accounting for institutionaliza-
tion in a particular way or, indeed, in many
different ways. Nor is there anything insup-
portable in the ambition to develop more
robust, normal science explanations of insti-
tutionalization so long as the contingency of
the definition is fully acknowledged and sub-
sequently recalled. Our point is that what is
presented, and what is counted, as ‘plausible’
or ‘adequate’ is not a reflection of the corre-
spondence of a particular approach with what
it aspires to refer to or ‘capture’ but, rather,
its resonance with available, and perhaps
dominant, discourses to which it is heard to
contribute in an affirming or disruptive
manner. To articulate this argument in terms
more familiar to institutional theorists:
actors employ rhetorical devices to connect ele-
ments of the existing or proposed [meaning] to
broader cultural understandings in order to sup-
port or challenge the comprehensibility of a [defi-
nition]. (Suddaby and Greenwood, 2005: 41,
emphasis added)
We have emphasized how institutional
theory advances an important alternative to
methodologically individualist analysis but
we have also argued that, in this process,
691
it uncritically deploys dominant ‘cultural
understandings’ to present a benign and
totalizing understanding of institutionaliza-
tion in which, for example, the institutional-
ization of agency is unaddressed. We have
also noted how recent discussion of institu-
tionalization has centred on the question
of how the theory might be enhanced by
remedying a perceived neglect of inter alia
‘agency’, ‘power’, ‘interests’, ‘inequality’,
‘meaning’ (e.g. Beckert, 1999; Whittington,
1992; Zilber, 2002; Lounsbury and
Ventresca, 2003; Phillips, 2003) where it is
assumed that any shortcoming identified in
institutional theory can be corrected by
applying a restitutive patch in a way that will
not transgress or compromise its particular-
ity. But these interventions have not reflected
on how the particularity of institutional
theory has permitted or spawned such limita-
tions. A consistently institutionalist perspec-
tive, in contrast, could be expected to
conceive of ‘agents’, and whatever is attrib-
uted to them (e.g. ‘interests’ and ‘power’)
as embedded manifestations of processes
of institutionalization, and as existing exter-
nally to such processes. What Meyer, Boli
and Thomas (1987: 13, quoted in Scott,
1995/2001: 42) have observed of ‘most
social theory’ would seem to be no less appli-
cable to neo-institutionalist analysis:
Most social theory takes actors (from individuals to
states) and their actions as real, a priori, elements
.... [in contrast] we see the ‘existence’ and charac-
teristics of actors as socially constructed and highly
problematic, and action as the enactment of broad
institutional scripts rather than a matter of inter-
nally generated and autonomous choice, motiva-
tion and purpose.
Meyer et al.’s (1987) commentary invites
the development of a more institutionally
grounded analysis of agency (and subjectifi-
cation) that has not been taken up by
institutional theorists. Foucault’s thinking
resonates, as Meyer and Jepperson
(2000, note 3) note, with the institutionalist
understanding that actors’ ‘characteristics’
are ‘socially constructed and highly
problematic’. But there is nothing equivalent,
692 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
in institutional theory, to the Foucauldian
view that everyday processes of institutional-
ization exemplify a disciplinary form of
power that is productive yet also dangerous
in respect of its subjectifying effects. In insti-
tutional theory, disciplinary power is either
unrecognized or domesticated (Lawrence
et al., 2001). Agency is displaced by a focus
upon ‘broad institutional scripts’ (new
institutional theory) or it is treated
as the locus of a previously missing variable,
in the form of power that is believed to
enhance its explanatory capability. This is
illustrative of how ‘old’, ‘new’ and ‘neo’
institutional analysis tends to flip-flop
between ‘structure’ and ‘agency’.
When faced with anomalies within institu-
tional theory, such as the paradox of embed-
ded agency, some institutional theorists have
turned to critical theories – for example, in
order to support efforts to pay greater atten-
tion to issues of inequality and conflict
(Hirsch and Lounsbury, 1997; Lounsbury
and Ventresca, 2002, 2003). However, the
belief that elements of critical theory might
be incorporated to develop a less partial
account of aspects of institutionalization
labours, in our view, under a misapprehen-
sion. Critical theory does not offer an ‘addi-
tive adjustment’ to other theories (Kuhn,
1970: 53). Instead, it advances alternative,
more radical, ways of representing the
nature, and especially the significance, of
processes of institutionalization. That institu-
tional theorists have largely ignored, or oth-
erwise dismissed critical theory, including
the thinking of Foucault (e.g. Hirsch and
Lounsbury, 1997: 412; Lounsbury and
Ventresca, 2003: 464), does not, for us, imply
that an opportunity to refine institutional
theory has been missed. Rather, it reflects
and affirms our thesis that institutional
theory and critical theory offer alternative,
value-oriented ways of representing the
social world, including the nature and signif-
icance of institutionalization.
That said, a more fully institutionalist
understanding of knowledge, including
‘agency’, can prompt a shift in the direction
of more critical thinking. In one of their more
radically phenomenological moments,21
Berger and Luckmann (1966: 82) caution
that ‘great care is required in any statements
one makes about the “logic” of institutions’.
Why do they urge this vigilance? Because
‘the logic [of institutions] does not reside in
the institutions and their external functional-
ities, but in the way these are treated in
reflection about them’ (1966). What is con-
ceived, or passes, for the logic of institutions
is inescapably an articulation of a particular
(value-oriented) discourse – such as institu-
tional or critical theory – not a reflection of
the social practices that are represented
through these discourses. The dimming of
this insight – that ‘reflective consciousness
superimposes the quality of logic on the
institutional order’ (1966) – results in, or
makes possible, the dominance, if not
monopolization, of the representation of
institutions and institutional theory by a form
of analysis that is positivistic and conserva-
tive in tenor. This dominance is reflected in
the absence of engagement with, or selective
appropriation of, critical theory by institu-
tional theorists.
In institutional theory, a posture of schol-
arly inquisitiveness towards whatever illumi-
nation critical theory might bring has been
exceptional. Institutional theorists have
seemed reluctant to pay critical theory con-
centrated attention – perhaps because of an
intuition that it could throw up some destabi-
lizing anomalies or ‘inconvenient facts’, and
thus ignite a process of theoretical reflection
and reassessment which would be counter-
productive to the business-as-usual, ‘puzzle-
solving’ modality of much institutional
theorizing (Kuhn, 1970: 35). Institutional
theory is perhaps, as Jepperson (1991) hints,
something of a prisoner of its own, distinc-
tive institutional(izing) logic(s); and, in this
respect, its analyses run the risk of:
becoming ideologies of the institutions they study.
Foucault has pointed to the double relation
between truth and power, between forms of
knowledge and power relations ... (Foucault, 1980).
When social scientists import the dominant
 EXAMINING ‘INSTITUTIONALIZATION’: A CRITICAL THEORETIC PERSPECTIVE
institutional logics into their analyses of individuals
and organizations in unexamined ways, they unre-
flectively elaborate the symbolic order and social
practices of the institutions they study. These elabo-
rations subsequently become factors in the repro-
duction of these institutions. (Friedland and Alford,
1991: 260)
That there is limited critical reflection within
institutional theory, as Jepperson (1991) and
Friedland and Alford (1991) point out, may
not be a problem for institutional theory.
To the contrary, we interpret this restriction
as contributing to institutional theory’s
appeal and influence as it suppresses
consideration of the ethics, institutonalized
as a value-orientation, of knowledge produc-
tion. For us, the boundedness of critical
reflection is a problem of institutional
theory. If critical reflection were more ener-
getically engaged, it would threaten the very
taken-for-grantedness of institutional theory
with respect to the ‘theoretical strategies’
(Jepperson, 1991: 143) that give it distinc-
tiveness and ensure its future reproduction.
Critical theory illuminates how institutional
theory ignores power; how neo-institutional
theory incorporates it in an inconsistent way;
and shows that neither variant is in a position
to appreciate the subjectifying effects of
institutionalization.22 By de-naturalizing the
analysis of institutions and processes of
social ordering constructed by institutional
theory, critical theory opens up the possibil-
ity of alternative forms of institutional analy-
sis, including a Foucauldian attentiveness to
subjectification.
In addressing the question of what value
critical thinking has for students of institu-
tionalization, our answer has been that it is
less germane as a resource for supplying
ideas or fixes for shortcomings detected in
institutional theory. Rather, a way of devel-
oping some critical distance from which
to appreciate the particularity and limits
of institutional theory. Appreciating the dif-
ferences between institutional theory and
critical theory avoids strained, contradictory
and confusing efforts to incorporate elements
of critical theory into institutional theory.
693
They each challenge the authority of individ-
ualist, rational choice forms of analysis. But
the forced integration or selective appropria-
tion of elements of critical theory to patch up
weaknesses in institutional theory risks
devaluation of their distinctive value-orienta-
tions and associated contributions to knowl-
edge. Respecting and preserving these
differences serves to enrich our understand-
ing and, more specifically, impedes any ten-
dency for a particular conception of
institutionalization to become totalizing (Lok
and Willmott, 2006). It is when critical
reflection upon the totalizing tendencies of
institutional theory is absent that it presents
an obstacle to the development of other,
critical forms of analysis as it paints them
as ‘politically charged’ or ‘biased’ in a
way that simply normalizes the ‘bias’, or
value-orientation, of institution theory.
A challenge for advocates of critical analysis
is to show why, instead of seizing upon
‘agency’ or ‘power’ as overlooked variables
for devising better predictions of institution-
alization, closer acquaintance with critical
theory can offer an alternative for anyone
interested in studying how power and agency
are institutionalized in forms of normaliza-
tion and subjectification.
APPENDIX
Critical theory is a capacious and slippery
label invoked to characterize diverse forms of
analysis. Just as institutional theory is, on
occasions, identified with one of its leading or
favoured (e.g. normative, rational choice,
sociological, economic or historical)
variants, critical theory is sometimes directly
associated with, or even assumed to be identi-
cal to, either Marxism (in its various forms)
or Critical Theory (distinguished by its
capitals) of the Frankfurt School (e.g.
Marcuse, Habermas, etc.). All versions of crit-
ical theory draw on a range of disciplines –
economics and philosophy, as well as
sociology and psychoanalysis, to advance
694 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
critical thinking within a broad framework of
humanistic Marxism (see Alvesson and
Willmott, 1996, especially ch. 3). Refusing
the restrictiveness of this intellectual terrain,
which contemporary Critical Theorists have
also sought to extend or revise, a growing
number and range of theories are identified
as ‘critical’.
So, in the contemporary context, it is
implausible to equate critical theory with
Critical Theory although an important conti-
nuity with the Frankfurt School is its inter-
disciplinary orientation and emancipatory
intent. A common, recent, thread is a critique
of death in a variety of forms, e.g. of realism,
of narratology, of the author. Our chapter
may also be read as a critique of the death
threat posed to critical theory in organization
studies by the suffocating expansion of
(uncritical) institutional theory. The range of
critical theory resonates strongly with critical
work that is emerging within the field of
management under the umbrella of Critical
Management Studies. For proceedings of the
CMS conferences held bi-annually since
1999, see <www.mngt.waikato.ac.nz/ejrot/
cmsconference/default.htm> and <www.
mngt.waikato.ac.nz/ejrot/>; see also Adler,
Forbes and Willmott, 2007.
Developments in the fields of philosophy
(Wittgenstein), linguistics and semiotics
(Saussure) and literary criticism (de Man)
have become highly influential in the con-
temporary formation of critical theory in the
social sciences, especially through the writ-
ings of Foucault, Derrida and, increasingly,
Bourdieu, Lacan and Žižek. What these criti-
cal thinkers challenge and unpack, in differ-
ent ways, is the capacity of language to
provide a faithful representation of that
which it aspires to reference (Rorty, 1979).
This ‘linguistic turn’ does not necessarily
involve a reductionist equation of social
reality with language, as some of its lazy
detractors are inclined to claim. Rather, the
post-realist position is that,
what we take to be knowledge is constructed in
and through language. Knowledge has no secure
vantage point outside such socio-linguistic
processes. Whatever knowledge is, it cannot be
justified through metaphors which commit us to
thinking that it is an accurate representation of the
external world. [It is] what Vattimo calls ‘the myth
of transparency ‘... it is language and the social
negotiation of meaning themselves that need
to be illuminated to display their constructive
properties and processes. (Johnson and Duberley,
2000: 96–7)
A ‘crisis of representation’ has developed as
a consequence of the view that the referent
eludes any transparent or stable representa-
tion by the signifier because, it is argued, the
latter can articulate only a particular, histori-
cally and culturally embedded and fre-
quently contested, signified. Consider the
signifier ‘critical theory’. This term (or text)
is deployed to point to a referent (what criti-
cal theory is) but the contested nature of crit-
ical theory makes it impossible to fully
stabilize what is signified by this signifier. To
the extent that some degree of stability is
accomplished, it is achieved hegemonically
by effectively excluding or silencing other
possible signifieds, and not as a consequence
of providing a fully transparent or compre-
hensive characterization of its referent.
Derrida coined the phrase ‘metaphysics of
presence’ to characterize the fantasy of trans-
parency (see also Rorty, 1979). This example
also serves to indicate the centrality of power
(hegemony) in the reproduction and transfor-
mation of human realities, including the real-
ities produced by scientists (Kuhn, 1970:
206). The resolution, or ‘sedimentation’, of
such contests is understood, by Foucault
(1980) for example, as an articulation of
power-knowledge, and not as a product of
consensus or epistemological privilege, as
implied, for example, by Berger and
Luckmann (1966) and Tolbert and Zucker
(1999). Post-realist thinking has fuelled the
development of critical theory across the
social sciences and humanities in ways that
have considerably extended its scope, diver-
sity and influence.
Analyses identified as ‘functionalist’ and
‘positivist’ have been amongst the primary
intellectual targets of critical theories as
these approaches are inclined to assume the
 EXAMINING ‘INSTITUTIONALIZATION’: A CRITICAL THEORETIC PERSPECTIVE
functional value of the status quo and/or the
ahistorical status of social facts (see Alvesson
and Willmott, 1996). But, of course, the aspi-
ration to critique the naturalization of the
present, whether in social science or every-
day life, does not exempt elements and ver-
sions of critical theory from critical scrutiny.
In such ways, ostensibly ‘critical standards’
within a discipline can ‘generate a relatively
closed world’ (Barnett, 1997: 18) as critical
theory becomes over-protective of its internal
sacred cows. It is the limiting, oppressive
qualities of such closures in all approaches
(including its own) that, in different ways,
critical theories aspire to bring to conscious-
ness and open up to scrutiny.
Critiques of naturalization of the present
are not, of course, limited to problematizing
how language(s) are engaged to bolster and
refine what is normal. For critical theories
assess processes of emancipation to be frus-
trated, nationally and globally, by socially
unnecessary limitations on radically demo-
cratic forms of decision-making and associ-
ated self-determination within both public
and private (e.g. workplace) spheres. Variants
of critical theory challenge the fetishized,
and seemingly uncontrollable, order of
global capitalism that generates extremely
asymmetrical distributions of resources and
life-chances. Critical theory does not pretend
to provide value-neutral reports of processes
of globalization, for example. Rather, reject-
ing the notion of value-free science as a
myth that sustains the status quo, critical
theories challenge the relentless pursuit of
growth for being socially divisive and eco-
logically unsustainable. Such critical think-
ing understands that resources – in the form
of knowledge as well as raw materials and
technologies – exist that could bring about a
radical redirection of priorities. Critical
theory, as conceived here, is engaged in the
critique of ideas and institutions – patriarchy,
racism, and science, as well as capitalism –
that are assessed to legitimize resistance to a
progressive transformation of social relations
as well as to the advancement of ideas and
institutions more relevant to facilitating radi-
cal change than to preserving the status quo.
695
NOTES
1 There are many versions of institutional theory.
We focus here on the dominant, sociologically
informed, versions in the Anglo-American literature.
As might be expected, there are regional variations,
and institutional theories that are more historical and
economic in emphasis (e.g. Menard and Shirley,
2005).
2 Methodological individualism ‘amounts to the
claim that social phenomena must be explained by
showing how they result from individual actions,
which in turn must be explained through reference
to the intentional states that motivate the individual
actors.’ (Stanford Encyclopedia of Philosophy,
<http://plato.stanford.edu/entries/methodological-
individualism> accessed 03/01/07)
3 The term ‘value-orientation’ is closely associ-
ated with the work of Weber and is a shorthand
translation of Weltanshaungen, a term which
Brubaker (1984) regards as virtually ‘untranslatable’!
Value-orientations are not judgements but, rather,
are ‘general views of life and the Universe’ that are
both theoretical and practical as ‘they endow the
world with meaning and at the same time define
paths of action’ (Brubaker, 1984: 62, citing Weber,
1949: 57). Since ‘methodological individualism (see
note 2) is also associated with Weber’s position, we
stress that it is possible to agree with philosophical
elements of Weber’s thinking without subscribing to
his methodology.
4 Aside from the question of their compatibility,
the lack of inquisitiveness is perhaps attributable to
dark mutterings about the leftist leanings of some of
the original institutional. theorists. In the repressive
intolerance of many business schools, scholars
have taken refuge in an orientation to the study of
institutionalization in which critical thought is
domesticated if not fully cleansed. Amongst that
band of highly influential, ‘old’ institutionalists,
Selznick is known for his youthful association with
‘the Trotskyists, the socialists, the anarchists and
Zionist socialists’ (Lipset, 1996: 4). Jonathan Murphy
alerted us to the link between leading institutional
theorists and leftist politics.
5 Likewise, critical students of organization have
rarely engaged with institutional theory. As an indica-
tor of this neglect or indifference, the coverage of
institutional theory by two critical textbooks is either
almost non-existent (Thomson and McHugh, 2002)
or largely descriptive (Clegg,1990).
6 That selective appropriations and translations
of elements of critical theory into institutional
theory (and vice-versa) have occurred is not at issue
(e.g. Oakes, Townley and Cooper, 1998; Lawrence,
Winn, and Jennings, 2001; Seo and Creed, 2002).
Such hybridization is inherently perilous and poten-
tially confusing, especially where some variant of
critical theory is shoehorned into the framework
696 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
of institutional theory. In this regard, we agree with
Lounsbury (2003: 216), though for rather different
reasons, that ‘analytical approaches of interest to
critical theorists [are] not easily translatable into the
repertoire of institutional analysis’.
7 Foucault’s work was cited more frequently in
scholarly social scientific journals during 1995–2000
than any other author, and indeed received twice the
number of citations as the second most cited author
(see Posner, 2001).
8 Against this thesis, it might be argued that
instrumental rationality provides for more assessment
of, and thus reflection upon, the means of attaining
ends as well as the possibility of distancing oneself
from (responsibility for) calculating their selection.
However, within Weber’s conception of instrumental
rationality, such forms of reflection and distancing
are themselves instrumentally rational.
9 Only as an aside (that is not integrated within
their notion of institutionalization), do Berger and
Luckmann make any reference to institutionalization
as an articulation of power; and, even then, it is
restricted to a discussion of a situation in which
forms of institutionalization compete with each other
(1966: 126–7). Specifically, they note that the
construction of reality which proves victorious in such
contests is likely to be advocated ‘by those
who wielded the bigger weapons rather than those
who had the better arguments’ (1966: 127).
But this very brief commentary on how conflicts
between rival forms of institutionalization are
resolved is absent from their (consensualist) concep-
tion of institutionalization.
10 Along with much else in Friedland and Alford’s
(1991) instructive contribution, this observation has
not been taken up in institutional theory. Instead
Friedland and Alford’s has been selectively appropri-
ated for its use of ‘logics’ and ‘contradiction’. We are
grateful to Jaco Lock for this insight.
11 The aspiration to critique the naturalization of
the present, whether in social science or everyday
life, does not exempt elements and versions of
critical theory from critical scrutiny. Critical thinking
may also be developed, selectively appropriated
and translated to bolster and refine what is ‘normal’
(cf Kuhn, 1970) – for example, through an assess-
ment and effective domestication of elements
that are potentially threatening to established
thinking, as is illustrated by the recent flirtation by
neo-institutonalists with critical discourse analysis
(Phillips, Lawrence and Hardy, 2004); semiotics and
actor network theory (Lawrence and Suddaby,2005)
and rhetoric (Suddaby and Greenwood, 2006).
12 See Baritz (1960) and Brief (2000).
13 Indeed, from our Foucauldian standpoint, it
would be perverse to claim that we provide an ‘accu-
rate interpretation’ either of Foucault’s work or of the
diverse contributions to institutional analysis dis-
cussed in this chapter; or, relatedly, that we aspire
to correct other interpretations that stand accused
of producing mere ‘social constructions’ which take
on ‘identities created as much by their users as
their authors’ (Mizruchi and Fein, 1999: 653).
In Foucauldian analysis, the author is de-centred
in the sense that s/he is not ascribed the
sovereign power to adjudicate the meaning of the
text. We recognize that this undermines both literal-
ism and the sovereignty typically attributed to
authors and, for this reason, it tends to attract knee-
jerk accusations of ‘relativism’ and ‘nihilism’.
However, reducing a text to a single, authoritative
reading – as dictated by the author or by anyone
else – would seem to be an absurd, Sisyphean task
(Camus, 1955).
14 Bhaskar’s warrant is a (retroductive) mode of
science that is concerned to disclose the causal
mechanisms which generate empirical phenomena,
whereas Habermas’s warrant is a counterfactual ideal
speech situation that, he argues, is inherent in the
structure of communication, and which provides a
foundation for objective knowledge.
15 By ‘non-foundationalist’ we mean ‘rejecting
the asymmetric image of basic (immediately justified,
foundational) beliefs that support nonbasic beliefs.
Non-foundationalists prefer the image of a web of
mutually supporting beliefs, which are mediated
through a particular community.
16 This allows for the possibility of productively
studying power in a variety of ways. Other critical
approaches, such as Braverman’s (1974) labour
process analysis, adopt a sovereign or juridical con-
ception of power and shed insight into the way
workers’ knowledge is appropriated by management
in the pursuit of profit.
17 Institutional theory does not readily conceive
of these ‘logics’ as forms of power since power is
associated with agency, whereas logics are associ-
ated with legitimacy.
18 It is also evident in his assessment of the con-
tribution of institutional theory which is character-
ized as one that ‘rests in the identification of causal
mechanisms leading to organizational change and
stability on the basis of precarious understandings
that organizational actors share, independent of
their interests’ (DiMaggio, 1988: 3). For critiques of
the use of ‘interests’ in institutional theory, see
Campbell, 2006; Enrione, Mazza and Zerboni, 2006;
Fligstein, 2006.
19 In Lawrence et al.’s typology, power as ‘domi-
nation’ is reserved, oddly enough, for ‘forms of
power that support institutionalization processes
through systems of organized, routine practices that
do not require agency or choice’ (2001: 637) – a
restriction that eliminates virtually every form or exer-
cise of non-juridical power. In comparison to ‘influ-
ence’, ‘force’ and ‘discipline’, ‘domination’ is
(conveniently) conceived by Lawrence et al. to be a
marginal and exceptional form of power.
 EXAMINING ‘INSTITUTIONALIZATION’: A CRITICAL THEORETIC PERSPECTIVE
20 In the spirit of self awareness and reflection, it
is appropriate to acknowledge that Foucault’s version
of critical theory leaves open the nature and
processes of emancipation. While this openness is
appealing to us, since it leaves such determinations
to local struggles, contexts and understandings,
other versions of critical theory – for example
Marxism and Critical Theory – identify more universal
notions of emancipation. The relevance of differing
versions of critical theory for understanding manage-
ment can be found in Alvesson and Willmott (2004),
and engaging debates about their relevance for
studying accounting can be found in Neimark (1994),
Armstrong (1994) and Hoskin (1994).
21 The phenomenological tradition, in which
Berger and Luckmann’s thinking is partially located,
problematizes, or denaturalizes ‘cultural understand-
ings’, albeit in a universalizing rather than historical,
power-sensitive, manner.
22 We are indebted to Jaco Loc for this felicitous
summary.
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234–254.

Taking Social Construction
Seriously: Extending the
Discursive Approach in
Institutional Theory
Nelson Phillips and Namrata Malhotra
Institutionalization occurs whenever there is a
reciprocal typification of habitualized actions by
types of actors. Put differently, any such typifica-
tion is an institution.
(Berger & Luckmann, 1967)
Early work in institutional theory1 focused
explicitly on the socially constructed nature
of institutions, arguing that they arise out of
the meaningful interactions of actors and
shape behaviour by conditioning cognition.
Meyer and Rowan (1977: 341), for example,
argue that ‘[i]nstitutionalization involves the
processes by which social processes, obliga-
tions, or actualities, come to take on a
rulelike status in social thought and action’.
In this definition, institutions are cognitive
structures and institutionalization is the
process whereby institutions are constructed
in social interaction through the production
of what Berger and Luckmann (1967: 54)
call ‘shared typifications’. This view of insti-
tutions drove much of the early work in new
29
institutional theory (e.g., Tolbert & Zucker,
1983) as researchers worked to understand
the effects of cognitive institutions on indi-
viduals and organizations.
In many ways, it is this cognitive focus
that provides the distinctiveness of institu-
tional theory. According to DiMaggio and
Powell (1991), new institutional theory is
characterized by ‘a scepticism toward
rational-actor models of organization’ (1991:
12) which are replaced by ‘an alternative
theory of individual action, which stresses
the unreflective, routine, taken-for-granted
nature of most human behaviour and views
interests and actors as themselves constituted
by institutions’ (1991: 14). By moving
beyond arguments regarding rational action
in contexts characterized by various forms of
resource dependency, institutional theory
provides explanations of patterns of behav-
iour that make little sense from other per-
spectives. Furthermore, and perhaps more
 TAKING SOCIAL CONSTRUCTION SERIOUSLY
importantly, institutional theory goes well
beyond the remit of these theories in examin-
ing the sources of the interests and identities
that determine the preferences which frame
rational action in the first place.
Yet the emphasis of this early work, and
the source of much of the distinctiveness of
institutional theory, has been diluted despite
the retention of a general interest in what
Douglas (1986: 11) calls the ‘social basis of
cognition’. Rather than clearly focusing on
cognitive institutions and continuing to
develop this unique contribution, the concep-
tualization of an institution has blurred and,
as a result, significant analytical power has
been lost. In fact, from the perspective of
much of recent institutionalism, institutions
are seemingly most recognizable by their
effects and a number of mechanisms that
produce isomorphism have been lumped
together to form the focus of institutional
analysis. However, such an all-encompassing
approach neglects critical theoretical and
philosophical distinctions among the differ-
ent mechanisms that lead to isomorphism.
For example, an organizational form that is
widely adopted in order to gain access to a
government grant is seen as equally the result
of an institution as an organizational form
that is adopted due to its taken-for-granted-
ness in a field. Yet, the first case is simply a
rational and conscious decision by managers
to allow their organizations access to
resources that they value. Clearly not the
sort of taken-for-grantedness originally
associated with institutions.
From our perspective here, defining an
institution based on its effects is problematic
for two reasons. First, in failing to clearly
focus on cognitive institutions, institutional
theory has conflated what have traditionally
been considered institutional processes with
resource dependency and the coercive appli-
cation of power. The fact that isomorphism
occurs in an organizational field does not nec-
essarily mean that taken-for-granted cognitive
structures are the cause. It is only by examin-
ing the actual micro-processes through which
organizations become more alike in form and
703
action that we can differentiate between truly
institutional forms of isomorphism and the
multitude of other pressures that can lead to
increasing similarities in form or action but
which do so in very different ways. Simply
calling something an institution because it
results in conformity does little to explain how
it actually does so and even less to explain
what it actually is. It is only by being very
clear about the nature of institutions, and by
ensuring that what we study fits that defini-
tion, that we can hope to develop deeper
understandings of what are legitimately
institutional processes.
Second, this lack of clarity about the
nature of institutions leads to a lack of
attention to explaining the actual process
of institutional production. As Zucker (1991:
105–106) observes:
Without a solid cognitive, micro-level foundation
we risk treating institutionalization as a black box
at the organizational level, focusing on content at
the exclusion of developing a systematic explana-
tory theory of process, conflating institutionaliza-
tion with resource dependency, and neglecting
institutional variation and persistence. Although
important insights can be gained by examining the
content of institutions, there is an ever present
danger of making the neo-institutionalist enter-
prise a taxonomic rather than explanatory theory-
building science. Institution theory is always in
danger of forgetting that labeling a process or
structure does not explain it.
By adopting a view of institutions that looks
all too much like the taxonomy that Zucker
feared, we have left ourselves with no way to
explain how they come to be. The fact that
very different kinds of things are treated as
different forms or elements of institutions
leaves us without any common understand-
ing of the process of institutional production
and, consequently, the nature of institutions.
In other words, a ‘taxonomic’ approach has
come to dominate institutional theory while
there has been little attention paid to develop-
ing an explanation for the process of produc-
tion of institutions in the first place.
In this chapter, we argue that there is a sig-
nificant opportunity for institutional theory to
clarify the nature of institutions and to develop
704 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
the sort of ‘solid cognitive, micro-level
foundation’ for institutional theory that
Zucker envisages. More specifically, we build
on one strand of work in institutional theory
that has begun to further develop an approach
to understanding the process of social con-
struction that underlies institutional produc-
tion and the ramifications of this for the
cognitive nature of institutions: the work done
to date developing a discursive approach to
institutionalization (e.g., Phillips, Lawrence,
& Hardy, 2004).
This work has begun to inform our under-
standing of institutionalization by providing
a theoretical and methodological approach
explaining the process of social construction
through which institutions are constituted.
As Phillips et al. (2004: 648) argue:
Understanding institutional phenomena requires
a broader, more comprehensive theory that
encompasses stability and change in institutions,
institutional fields, and institutional effects.
Including a much more developed discursive con-
ceptualization of social construction is one impor-
tant step toward understanding and exploring
these issues.
We draw on this existing work and examine
the potential of discourse analysis in the
study of institutional processes and, more
generally, the distinctive role of discourse
analysis in conceptualizing social construc-
tion in institutional theory.
In further developing a discursive perspec-
tive, we contribute to discussions of institu-
tional theory in four ways. First, as we said
above, discourse analysis provides a useful
way of conceptualizing the process through
which institutions are socially constructed. If
institutional theory is going to take social
construction seriously, we need a much more
developed idea of how the process of social
construction occurs. Discourse analysis pro-
vides the building blocks for a theory of the
production of institutions and a method for
researching instances of institutionalization.
Second, we explore some of the ramifica-
tions of returning to a strong form of social
construction in institutional theory. In partic-
ular, we argue that accepting the notion that
institutions are socially constructed leads
necessarily to the observation that all institu-
tions are fundamentally cognitive. If we
accept, as Meyer and Rowan (1977) argue,
that institutions take on a rulelike status in
thought, then no matter what the mechanism
of their genesis, they are social facts and are
fundamentally cognitive. Institutional theory
therefore becomes a perspective focused on
developing a deep understanding of the
genesis, maintenance, change and effects of
cognitive institutions.
Third, building on the previous point,
we go on to argue that we need to de-
institutionalize the tripartite understanding
of regulative, normative and cultural-
cognitive institutions and move to a much
clearer separation between mechanisms that
lead to isomorphism and the institutions that
may or may not be produced by these
mechanisms. Rather than the current lack
of clarity, we need a more nuanced theory
that differentiates between mechanisms or
pressures for institutionalization and the
actual process of institutionalization itself.
In other words, we need to differentiate
between simple isomorphism, which can be
caused by a variety of mechanisms and the
institutional processes that drive isomor-
phism by structuring cognition and that have
been the core focus of institutional theory.
Finally, we point to the opportunities for
research into the production of institutions
from a discursive point of view. While dis-
course analysis is a theoretical framework
explaining processes of social construction,
it is also a method for exploring these
processes that can be applied usefully
to the study of institutions and institutional-
ization. Discourse analysis therefore
provides well-developed approaches to
empirically investigating the actual processes
of production that underlie institutions.
In doing so, discourse analysis can help
move institutional theory from its current
focus on the effects of institutions in organi-
zational fields to a focus on the micro-level
processes that lead to the formation of
cognitive institutions.
 TAKING SOCIAL CONSTRUCTION SERIOUSLY
We will present our arguments in
three steps. We begin by discussing the social
constructivist roots of new institutional
theory and further explain why we believe
the tripartite view of institutions that has
developed in institutional theory is problem-
atic. We will then discuss how discourse
analysis provides a theoretical and method-
ological frame for understanding the
processes of social construction that under-
pin institutionalization. We draw on dis-
course analysis to provide an alternative
perspective on the nature of institutions and
the micro-institutional processes upon which
they depend. Finally, we conclude with a dis-
cussion of some of the implications of this
view of institutions for empirical research in
institutional theory and outline some of the
outstanding issues and problems that remain
unresolved.
INSTITUTIONS AND THE SOCIAL
NATURE OF COGNITION
In the first part of this section, we explore
the social constructivist thread running
through new and neo-institutionalism.
We revisit the roots of institutional
theory and follow the development of
the cognitive view of institutions in
institutional analysis. Our point in the
first part of this section is to show
that various kinds of social construc-
tionism have played a central role in
institutional theory from its earliest develop-
ment and that this constructionism points
directly to the cognitive nature of institu-
tions. We will then discuss the recent devel-
opment of the tripartite conception of
institutions as regulative, normative and cul-
tural-cognitive that has come to dominate
institutional analysis and argue that there is
an opportunity for institutional theory to
progress more quickly in understanding
institutions by returning to its roots in social
constructivism and refocusing on cognitive
institutions.
705
Social Construction and New
Institutional Theory
As far back as the late nineteenth century,
institutional economists began challenging
economic assumptions about rational indi-
vidual behaviour. Veblen (1909: 245), for
example, argued that behaviour is governed
by habit and convention where an individ-
ual’s conduct is directed by his or her habit-
ual relations to other members of his or her
group. He defined institutions as ‘settled
habits of thought common to the generality
of man’ (1909: 239). In doing so he foreshad-
ows the development of the cognitive view of
institutions that came to characterize new
institutionalism many years later. This defini-
tion is particularly striking as we can already
see a strong cognitive understanding of insti-
tutions at such an early stage of development
of institutional thought.
Even Menger ([1871]1981), who stoutly
defended the utility of overarching simplify-
ing assumptions in economics, acknowl-
edged the importance of broader institutional
forces and, in fact, argued that institutions
themselves were social phenomena in need
of theoretical explanation (Scott, 2001: 2).
Commons (1924), in emphasizing that a
transaction was the appropriate unit of analy-
sis alluded to the rules of conduct governing
a transaction. By rules of conduct he meant
something very much like a social institution
characterized by a degree of adherence to
collective norms of reasonable behaviour
(Van de Ven, 1993).
While modern institutional theorists may
find significant aspects of this work quite
sympathetic to their views, organizational
institutionalism was predominantly built on
more sociological foundations. The earliest
forms of institutionalism in sociology started
with a more functionalist flavour than
characterizes institutional theory today, but
with a clear cognitive orientation. Sumner
(1906), for example, defined an institution
simply as a concept or idea. Scott (2001)
summarizes Sumner’s conceptualization of
institutions as evolving from individual
706 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
activities to folkways, to mores, and to full-
fledged institutions, although he also recog-
nized that institutions can also be enacted as
products of rational invention and intention.
Similarly, Davis (1949) defined an institution
as a set of interwoven folkways, mores, and
laws built around one or more functions. In
both cases the cognitive nature of institutions
is clear although underpinned by a function-
alist understanding of social processes.
But there was also important early work
from a less functionalist perspective, clearly
emphasizing the cognitive and socially con-
structed nature of institutions. Cooley
([1902] 1956: 313–314), for example,
observed that institutions are developed
through interactions and exist ‘as a habit of
mind and of action, largely unconscious
because largely common to all the group ....
the individual is always cause as well as
effect of the institution’. Hughes (1936: 180)
further emphasized the social production of
institutions when he defined them as an
‘establishment of relative permanence of
a distinctly social sort’. Mead (1934) drew
attention to the role of symbolic systems
arguing that meaning is created in interaction
through gestures, particularly vocal gestures
in the form of language; an argument that
is particularly interesting to us here as it
foreshadows a discursive approach to the
analysis of social construction. Schutz
[1932](1967) similarly examined ways in
which common meanings are constructed
through interaction by individuals and
become taken-for-granted assumptions.
Berger and Luckmann (1967) proposed the
most influential conceptualization of institu-
tions as cognitive structures. Their approach
focused on the creation of shared knowledge
and belief systems through meaningful
interaction. They saw their work as being
about developing a sociology of knowledge
that would explain how objectified social
knowledge arose through meaningful and
subjective interaction. In doing so, they
brought cognitive frameworks for conceptual-
izing institutions centre-stage. Berger and
Luckmann (1967: 58), in their commonly
cited definition, define an institution as
‘a reciprocal typification of habituated
actions by types of actors’. In other words,
institutions arise when groups of people come
to understand some activity in a certain way
and that understanding becomes shared
across a group. From their perspective, insti-
tutions are cognitive constructions and the
process of institutionalization is a process of
social construction.
While there were many early discussions
of institutions in the literature, systematic
attempts to connect organizations and
institutions only appeared much later.
Selznick (1948) was the first major
contributor to the institutional theory of
organizations. Selznick (1957) described
institutionalization as a process that happens
to an organization over time, reflecting its
own distinctive history, the people who have
been in it and the vested interests they have
created, and the way it has adapted to its
environment. From his perspective, to insti-
tutionalize is to ‘infuse with value beyond the
technical requirements of the task at hand’
(Selznick, 1957: 16).
This early approach to institutional analy-
ses of organizations was followed by the
emergence of new institutional approaches to
organizational sociology. Scott (2001: 39)
points out that attention to cognitive frames
and cultural frameworks rather than to nor-
mative systems was a critical defining feature
of this new form of institutional theory in
sociology. The most significant difference
between the old and the new institutionalisms
lies in the conception of the cognitive bases of
institutionalized behaviour. According to the
old institutionalists, organizations became
institutionalized when they were ‘infused
with value’ as ends in themselves (Selznick,
1957). Individuals’ preferences were shaped
by values and norms emphasizing normative-
evaluative judgements. New institutionalism
departed from a focus on a moral framing in
terms of norms and values and drew attention
to the taken-for-granted scripts, rules, and
classifications as the basis of institutions
(DiMaggio & Powell, 1991).
 TAKING SOCIAL CONSTRUCTION SERIOUSLY
The works of Meyer and Rowan (1977)
and Zucker (1977) grounded new institu-
tional theory firmly in the sociological
realm and conspicuously in the work of
Berger and Luckmann (1967). Meyer and
Rowan (1977) provide a macro-perspective
on institutionalized organizations, arguing
that formal structures of organizations reflect
the myths of their institutional environments
instead of the demands of their work activi-
ties. They draw on Berger and Luckmann’s
(1967) notion of institutionalized rules as
classifications built into society as recipro-
cated typifications or understandings when
they argue that ‘formal structures are not
only creatures of their relational networks in
the social organization .... the elements of
rationalized formal structure are deeply
ingrained in, and reflect, widespread under-
standings of social reality (Meyer & Rowan,
1977: 54).
In describing institutionalization as a
process by which social processes, obliga-
tions, or actualities take on a rulelike status
in social thought and action, they implied
that the rules become taken-for-granted.
From their conceptualization of institutional-
ization one could deduce that they perceived
the nature of institutions to be primarily
cognitive. They state, ‘such elements of
formal structure are manifestations of
powerful institutional rules which function
as highly rationalized myths that are binding
on particular organizations (Meyer &
Rowan, 1977: 343). In other words, these
shared understandings result in certain
organizations having to perform certain
activities regardless of their rationale
because of the taken-for-granted nature of
those understandings. The fact that we under-
stand an organization to be of a particular
kind means that a set of taken-for-granted
rules must be followed. But it is not that
some outside actor is enforcing these rules.
Rather it is the fact that they are broadly
accepted makes them unavoidable. Meyer
and Rowan (1977) therefore provide one
of the strongest statements in terms of the
cognitive nature of institutions.
707
Zucker (1977) provides a complementary
characterization of institutions as primarily
cognitive. In her study of the role of institu-
tionalization in cultural persistence, Zucker
argues that ‘internalization, self-reward, or
other intervening processes need not be pres-
ent to ensure cultural persistence because
social knowledge, once institutionalized,
exists as a fact, as part of objective reality,
and can be transmitted directly on that basis’
(1991: 83). Most importantly, the study
comes closest to developing Berger and
Luckmann’s (1967) work in that it deals with
the process of institutionalization especially
highlighting the social constructivist nature
of the process: ‘[i]t is a process by which
individual actors transmit what is socially
defined as real and simultaneously at
any point in that process the meaning of
an act can be defined as more or less taken-
for-granted part of this social reality’
(Zucker, 1977: 85). In other words, institu-
tionalized acts are perceived as objective as
they can be repeated by other actors with a
common understanding of the act. Further,
institutionalized acts are exterior when
‘subjective understanding of acts is recon-
structed as intersubjective understanding so
that the acts are seen as part of the external
world’ (1977: 85). Most critically, institu-
tionalized acts do not require monitoring and
enforcement.
Following Meyer and Rowan (1977) and
Zucker (1977), several significant contribu-
tions to institutional theory developed a
macro-level perspective on institutionaliza-
tion (e.g., DiMaggio & Powell, 1983; Meyer
& Scott, 1983). However, there seemed to be
little attention to clarifying and developing,
theoretically and empirically, an understand-
ing of the nature of institutions and the
process by which they come to be. Rather the
line of enquiry changed from institutions and
how they are constructed to the effects of
institutionalization. DiMaggio and Powell
(1983), for example, addressed the question
of why there is such striking homogeneity of
organizational forms and practices, the phe-
nomenon of isomorphism. They elucidated
708 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
three key mechanisms by which institutional
effects are diffused through a field of organi-
zations resulting in structural isomorphism:
coercive, mimetic and normative.
Tolbert and Zucker (1983) investigated the
diffusion of civil service employment prac-
tices across US local governments, arriving
at a two-stage model of diffusion encompass-
ing early adopters and late adopters. Early
adoptions were motivated by functional
imperatives but as an increasing number
of organizations adopted the innovation, the
authors surmised that it became progres-
sively institutionalized. They concluded that
social legitimacy was a driver for late
adopters.
Fligstein (1987) also examined diffusion
of the rise of finance personnel to the posi-
tion of president in large US corporations
between 1919 and 1979. He posited a
mimetic explanation of diffusion. An anti-
trust legislation pushed firms toward unre-
lated diversification creating the conditions
for the rise in finance officers but as these
actors established themselves in one set of
firms, their counterparts in other firms were
able to use that as a basis for gaining power
(Fligstein, 1987).
Several studies in the 1980s pursued cross-
category comparisons, for example, between
commercial and not-for-profit organizations
suggesting that the former were less sensitive
to institutional influences (e.g., Baron &
Bielby, 1986; Eisenhardt, 1988; Fennell &
Alexander, 1987; Pfeffer & Davis-Blake,
1987; Tolbert, 1985). Further studies made
cross-national comparisons analyzing the
effect of cultural institutional effects (e.g.,
Carroll, Goodstein, Gyenes, 1988; Hamilton
& Biggart, 1988; Lincoln, Hanada, &
McBride, 1986). All of these studies covered
a variety of different agents of diffusion
including government agencies, professional
networks, senior executives; a wide array of
practices including personnel procedures,
boundary-spanning strategies and accounting
practices; and a diverse range of settings
including municipalities, hospitals, universi-
ties and corporations.
The 1980s saw an impressive expansion
of the realm of institutional theory both
theoretically and empirically. However, there
appeared to be continued ambiguity about
the nature of an institution and the processes
through which it is constituted. The ambigu-
ity is particularly striking in Baron and
Bielby (1986), where the term institution is
conceptualized in fundamentally different
ways. The study depicts mimetic, coercive
and normative mechanisms underpinning the
spread of modern personnel administration
in the US during and after World War II. In
one sense, it uses the term institution as con-
stituting cultural prescriptions but in another
usage it describes it as depicting regulatory
agencies. The first usage resonates closely
with Meyer and Rowan (1977) and Zucker
(1977) but the description of institutions as a
framework of regulatory policies leans more
toward the sort of perspective developed
in institutional economics (e.g., North,
1990). This example illustrates that in spite
of significant advances in institutional
research, a foundational concept – the
institution – remains unclear. And, to make
matters worse, these contradictory conceptu-
alizations of the nature of institutions
remained unresolved over the next decade
and, in fact, became exacerbated.
To summarize, impressive theoretical and
empirical advances have been made in institu-
tional theory over the past three decades. At
the same time, much of this work has side-
stepped the issue of what an institution actu-
ally is and how it comes to be. Although the
cognitive nature of institutions is ostensibly
the foundation of institutional theory, estab-
lished clearly in the early works of Meyer and
Rowan (1977) and Zucker (1977), we see that
very aspect gets muddied through the 1980s
and 1990s. A conspicuous absence of cita-
tions to Meyer and Rowan (1977), Zucker
(1977) and Berger and Luckmann (1967) in
much of the work reflects this lack of clarity.
The process of institutionalization and the
role of social construction in that process –
the very basis for understanding that institu-
tions are fundamentally cognitive – are
 TAKING SOCIAL CONSTRUCTION SERIOUSLY
often neglected. Partly this has occurred
because of the overwhelming attention in
macro-level institutional research on institu-
tional effects rather than the process itself.
But to a great extent Scott’s (1995) three
pillars framework for defining institutions
has compounded the ambiguity. We expand
on this in greater detail in the next section.
Challenging the Three Pillars
As we discussed above, several influential
contributions to institutional theory soon fol-
lowed the foundational works of Meyer and
Rowan (1977) and Zucker (1977). In one of
the most often cited articles, DiMaggio and
Powell (1983) identified the now ubiquitous
three mechanisms of institutional isomorphic
change. However, while this framework is
very valuable in identifying sources of pres-
sure for organizational isomorphism, the
mechanisms they propose shed little light on
the actual process of institutionalization – a
prerequisite for understanding institutions –
nor on the nature of institutions.
Furthermore, there is an underlying ten-
sion in their framework. They begin by
clearly indicating that they are interested in
something other than simple rational actor
explanations for isomorphism:
Today, however, structural change in organizations
seems less and less driven by competition or by the
need for efficiency. Instead, we will contend,
bureaucratization and other forms of organiza-
tional change occur as the result of processes that
make organizations more similar without necessar-
ily making them more efficient. (DiMaggio &
Powell, 1983: 147)
Yet at the same time, they mix together
acting in a taken-for-granted way in the face
of the cognitive institutions of Meyer and
Rowan (1977) and acting purposefully and
rationally in the face of coercion or norma-
tive pressures. Furthermore, they indicate
that, in fact, the sorts of cognitive institutions
that Meyer and Rowan (1977) are interested
in may be a result of these other mechanisms.
They argue that while the ‘institutional
709
approach associated with John Meyer and his
students posits the importance of myths and
ceremony’, it ‘does not ask how these models
arise’ (DiMaggio & Powell, 1983: 157).
They then go on to suggest that their mecha-
nisms may provide some explanations for
how and why cognitive institutions arise.
The work of DiMaggio and Powell (1983),
and the irresolvable ambiguity of their
framework, was taken up and developed by
Scott (1995, 2001) in his highly influential
book Institutions and Organizations. Scott’s
book has played a significant role in shaping
the broad conception of institution that has
come to dominate in institutional theory and
has also had an important influence more
broadly across related fields such as interna-
tional management. We believe, however,
that this conceptualization may in fact have
been a distraction from actually understand-
ing the process of institutional production
that is essential to completely comprehend
the nature of institutions as it has had the
effect of taking institutionalization for
granted.
In his book, Scott develops a typology of
what constitutes an institution comprising
three component elements or pillars: the regu-
latory, normative and cultural-cognitive pillars.
He draws on DiMaggio and Powell’s (1983)
typology to describe the mechanisms of con-
trol – coercive, normative and mimetic –
underpinning the regulatory, normative and
cultural-cognitive pillars respectively. The reg-
ulatory pillar emphasizes explicit regulatory
processes involving ‘the capacity to establish
rules, inspect others’ conformity to them, and
as necessary, manipulate sanctions – rewards
and punishments – in an attempt to influence
future behaviour’ (Scott, 2001: 52). He goes on
to explain that ‘[f]orce, fear, and expedience
are central ingredients of the regulatory pillar’
(Scott, 2001: 53). Powerful actors may impose
their will on others, based on the threat of sanc-
tions or by offering inducements. In summary,
the basis for compliance underlying a regula-
tory pillar is expedience, the mechanism is
coercive, and the basis of legitimacy is socially
sanctioned.
710 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
The normative pillar emphasizes ‘norma-
tive rules that introduce a prescriptive, evalu-
ative and obligatory dimension into social
life’ (Scott, 2001: 55). Norms specify how
things should be done and provide legitimate
ways of pursuing valued ends. The basis of
compliance is social obligation, the mecha-
nism is normative and the basis of legitimacy
is moral. Sometimes regulative and norma-
tive pillars can be mutually reinforcing, espe-
cially when coercive power is legitimated by
a normative framework that both supports
and constrains the exercise of power (Scott,
1987). Scott (1995) points to the normative
conception of institutions embraced by early
sociologists such as Durkheim, Parsons, and
Selznick, who focused on types of institu-
tions such as kinship groups, social classes,
and religious systems that are usually under-
pinned by common beliefs and values.
The cultural-cognitive pillar is what Scott
(1995) considers central to the thinking of
scholars such as Berger, Meyer, and Zucker.
The basis of compliance underlying the
cultural-cognitive pillar is taken-for-granted-
ness based on shared understandings, the
mechanism is mimetic, and the basis of legit-
imacy is something that is comprehensible,
recognizable and socially supported (Scott,
2001). Compliance occurs because other
types of behaviour are inconceivable – it
becomes the ‘way we do things around here’.
The socially mediated construction of a
common framework of meaning is central to
the cultural-cognitive pillar.
Scott’s typology of the three pillars pro-
vides a comprehensive all-inclusive frame-
work combining the different perspectives on
institutions emanating from different theoret-
ical disciplines. While such a typology serves
that purpose of integrating different perspec-
tives, conceptualizing institutions as com-
prising these three disparate elements raises a
number of problems. First, the processes by
which these three pillars come to be are dif-
ferent. Scott (1995) himself points out that
the three pillars are based on very different
philosophical assumptions about the nature
of social reality. This is problematic for the
development of a unified theory of institu-
tions as it is difficult to see how to bridge the
ontological differences between the underly-
ing perspectives on which the pillars rest.
Second, the dynamics arising out of the
three pillars are very different. The regulative
and normative aspects of institutions are
‘the products of human design, and the out-
comes of purposive action by instrumentally
oriented individuals’ (DiMaggio & Powell,
1991). Consequently, there is an opportunity
for deviance and contestation as agents
work to resist pressures that they recognize
and which they believe to not be in their
interests (Hirsch, 1997). Questions of power
and politics are central to these pillars as
actors work purposively and consciously to
advance their own interests. Furthermore, the
literature that is most useful in understanding
these dynamics lies largely in work on
power, resource dependency, and other
related work.
The cognitive aspect of institutions, on the
other hand, is very different from the other
two pillars (DiMaggio & Powell, 1991;
Hirsch, 1997; Hoffman, 1997, 1999). Hirsch
(1997) argues that the basic assumptions and
mechanisms underpinning the regulative and
normative pillars are, in fact, rejected in a
cognitive framework. In the first two pillars
stability and compliance is assured through
values and norms that provide individuals
and corporate actors consciously understood
legal, social or moral rules and guidelines for
behaviour (Hirsch, 1997). On the other hand,
within a cognitive frame conformity is driven
unreflectively. As Hirsch puts it, the cogni-
tive pillar works with ‘no questions asked
and without deviation’ (Hirsch, 1997: 1710).
The underlying questions that arise around
this pillar and the sorts of theoretical per-
spectives useful in answering these questions
are fundamentally different from the other
two pillars.
Third, if an institution is enduring and
stable then it does not need regulatory sanc-
tions or other social controls to support it – it
is simply taken-for-granted. In a discussion of
various avenues for institutional reproduction,
 TAKING SOCIAL CONSTRUCTION SERIOUSLY
Powell (1991) alludes to the exercise of power
in ensuring persistence of certain practices but
acknowledges that practices can take on a life
of their own and not require any active elite
support. Zucker (1991: 86) succinctly argues
that ‘direct social control through norms or
sanctions (incentives or negative) is not neces-
sary .... applying sanctions to institutionalized
acts may have the effect of deinstitutionalizing
them .... the act of sanctioning may indicate
that there are other possible, attractive alterna-
tives’. Berger and Luckmann, similarly, con-
trast institutions with other forms of social
control:
To say that a segment of human activity has been
institutionalized is already to say that this segment
of human activity has been subsumed under social
control. Additional control mechanisms are required
only in so far as the processes of institutionalization
are less than completely successful. (1967: 73)
This is a powerful argument suggesting
that institutions are best thought of as
fundamentally cognitive and that these other
two pillars not be combined in a theory of
institutions. When something has become
institutionalized no outside sanctions or
controls are required. These other forces can
create social order, but they are of a very dif-
ferent sort than cognitive institutions.
Furthermore, this raises an interesting the-
oretical question: are the regulative and nor-
mative pillars, important pressures in the
process of institutionalization rather than
elements of an institution? It would seem
that most of us, for example, obey traffic
laws unthinkingly rather than because we
are concerned about the potential punish-
ment. Traffic laws have become a cognitive
institution for most of us most of the time.
However, the appearance of a new law often
leads to changes in behaviour because of the
potential punishment that is associated with
the new law. But soon it too becomes taken-
for-granted over time. It is important to note
that there is no way to differentiate between
the two motivations for behaviour except
by examining the behaviour itself. We need
to study intentions at an individual level
to understand which sort of mechanism
711
is functioning. Much of the empirical work in
institutional theory has failed to do this leav-
ing us without any clear indication of what
actually happened.
In sum, we are not arguing for a separate
institutional theory of cognitive institutions
or claiming that one type of institution is
better than another. Rather we are posing
a question central to the theoretical founda-
tion of neo-institutional theory – what is
an institution and how does it come to
be? Furthermore, we are highlighting the
problems with the three pillars approach
in helping address this question.
We believe we need to delve into the
process of institutional production at the
macro-organizational level that provides
insight into how an institution comes to be.
And, we will argue in the next section that a
discursive perspective on institutions and
institutionalization provides a practical foun-
dation for developing a more effective theory
of institutions. Using a discursive perspective
we are able to illuminate the social construc-
tivist nature of the process of institutionaliza-
tion and this leads us to the understanding
that when compliance comes naturally and
automatically without the active intervention
of sanctions or norms an institution comes to
be. Hence, institutions are fundamentally
cognitive. In other words, a discursive
approach is a useful theoretical and method-
ological approach for understanding micro-
processes of institutionalization at the
macro-organizational level and clarifies the
cognitive nature of institutions.
USING DISCOURSE ANALYSIS TO
UNDERSTAND AND STUDY
INSTITUTIONS
In this section, we will explore some of the
implications of a discursive perspective for
institutional theory. We will begin by
explaining what discourse analysis is and
explaining its usefulness as a theoretical and
methodological framework for studying
712 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
processes of social construction. We will
then discuss the existing literature which
links discourse analysis and institutional
theory, focusing in particular on a discursive
model of institutionalization drawing on
Phillips et al. (2004) We will argue that a dis-
cursive view of institutions leads to a very
different view than the prevailing idea of
three pillars of institutions as argued by Scott
(2001). Finally, we will discuss some of the
ramifications for theory and empirical inves-
tigation in institutional theory of adopting
this approach.
Discourse Analysis and Social
Construction
Discourse analysis, at its most fundamental,
is an attempt to answer the question of where
meaning comes from (see Alvesson &
Karreman, 2000; Grant, Hardy, Oswick, &
Putnam, 2004; Phillips & Hardy, 2002 for
extended discussions of discourse analysis).
Understanding what discourse analysis is
about begins with an understanding of what
discourse is. Discourse, in general terms,
refers to an interrelated set of texts and the
associated practices of production, dissemi-
nation, and reception that bring an object into
being. For example, at one point in history
the concept of endangered species did not yet
exist and by extension there were no ‘endan-
gered species’ as we understand them today.
Through a long process, the concept of
endangered species came to be meaningful
and accepted. Furthermore, the concept
became applied to certain species of animals
and endangered species came into being.
This process, from a discourse analysis per-
spective, occurs in and through discourse.
Discourse analysis, by extension, is the
study of discourse and the social reality that
it constitutes. In our case here, the study of
the discourses that are implicated in the
social production of institutions. But in addi-
tion to simply a method of studying social
construction, discourse analysis includes
strong claims about the way in which social
reality is constructed through the production,
transmission, and reception of texts.
Discourse analysis is therefore both a method
and a methodology in that it makes explicit
claims about the nature of the social world
and provides a set of tools for studying it
(Phillips & Hardy, 2002).
It is important to point out that discourses
can never be found in their entirety.
Discourse analysts are therefore limited to
examining selections of the texts that
embody a particular discourse. Derived
from linguistics, ‘text’ is used to refer to
various forms of meaningful interaction. In
other words, texts are texts because they can
be interpreted. Texts may take a variety of
forms, including written texts, spoken
words, pictures, symbols, artefacts, etc. At
the same time, discourse analysts do not
simply focus on individual texts; rather, in
analyzing discourse researchers must refer
to bodies of texts since it is the interrela-
tions between texts, changes in texts, new
textual forms, and new systems of distribut-
ing texts that constitute a discourse over
time. Similarly, discourse analysis requires
researchers to make reference to the social
context in which texts are found and the dis-
courses of which they are a part are pro-
duced. It is this connection between
discourses and the social reality that they
constitute that makes discourse analysis
a powerful method for studying social
phenomena.
Texts can thus be considered to be a dis-
cursive ‘unit’ and a material manifestation of
discourse. Texts are not meaningful individu-
ally: it is only through their interconnection
with other texts, the different discourses
upon which they draw, and the nature of their
production, dissemination and consumption
that they are made meaningful. Discourse
analysis explores how texts are made mean-
ingful through these processes, and also how
they contribute to the constitution of social
reality by making meaning.
What is important here from a social con-
struction point of view is that these processes
 TAKING SOCIAL CONSTRUCTION SERIOUSLY
do not occur in single texts. No single text is
sufficiently powerful to bring an object into
being. Social construction occurs when suffi-
cient numbers of texts are produced and
structured in discourses. These texts draw on
one another and in doing so increasingly give
the social reality represented in the texts a
taken-for-granted facticity. Any one text is
insufficient to result in the construction of
some new object. It is only when complex
bodies of text occur that this process can
move forward.
Discourse and Institutional
Theory
There has been growing interest among
scholars of institutional theory in the discur-
sive perspective and its potential to further
explicate and expand core aspects of this
influential theoretical stream. There are at
least two triggers that have sparked this inter-
est: first, the publication of Phillips,
Lawrence and Hardy’s (2004) article arguing
for a rapprochement between institutional
theory and its social constructivist roots and,
second, when there has been an important
shift in institutional theory from the language
of conformity and isomorphism to a strong
interest in change and deviation (e.g.,
Greenwood & Hinings, 1996).
In their article, Phillips et al. (2004) begin
by arguing that the processes underlying
institutionalization are not well understood.
They go on to argue that institutionalization
occurs as actors interact and come to accept
shared definitions of reality, and that it is
through linguistic processes that definitions
of reality are constituted (Berger &
Luckmann, 1967). From their perspective, an
institution is a reciprocal typification of
habitualized action by types of actors and
institutionalization is the ‘social process by
which individuals come to accept a shared
definition of social reality’ that enacts an
institution (Scott, 1987: 496). Thus, the
social construction of reality underpins the
713
very existence of an institution and the
process of institutionalization. It is this
aspect that resonates strongly with discourse
analysis. It is important to emphasize that
discourse analysis is not just a methodologi-
cal approach but also a theoretical approach
with underlying theoretical assumptions that
relate specifically to the social construction
of reality (e.g., Chia, 2000; Gergen, 1999;
Phillips & Hardy, 2002; Grant & Hardy,
2004) making it a potentially powerful and
useful lens in the context of institutional
theory. Institutions as social constructions,
produced through meaningful interaction, are
central to institutional theory (e.g., Meyer &
Rowan, 1977). From a discursive perspec-
tive, institutions are not just social construc-
tions but social constructions constituted
through discourse (Phillips et al., 2004).
In their article Phillips et al. (2004)
propose a model linking action and discourse
that begins to explain the process of
institutionalization (see Figure 29.1).
Institutionalization does not occur through
the simple imitation of an action by immedi-
ate observers, but through the creation of
supporting texts that range from conversa-
tional descriptions among co-workers and
colleagues to more elaborate and widely dis-
tributed texts such as manuals, books, and
magazine articles. Actions do not become
institutionalized by themselves but only
when they become understood in a particular
way. This is particularly true in the organiza-
tional realm where many actions are not
directly observable but must rather be
learned about through accounts in various
texts (think of Total Quality Management
and its institutionalization as a common
organizational practice). Accordingly, the
upward, diagonal arrows illustrate how the
actions of individual actors affect the discur-
sive realm through the production of texts,
some of which leave meaningful traces that
become embedded in new or existing
discourses. Not all, or even most, actions
lead to the production of texts. But some
do and some of these go on to influence the
discourse in important ways.
714 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Figure 29.1 The relation between action and discourse (adapted from Phillips et al., 2004)
In turn, discourses provide the socially
constituted, self-regulating mechanisms that
enact institutions and shape the actions that
lead to the production of more texts.
The bodies of texts that accumulate lead to
the production of ‘shared typifications’ and
institutions are produced through processes
of social construction. Thus, the discursive
realm acts as the background against which
current actions occur – enabling some
actions, constraining others (as illustrated
by the downward, vertical arrows in
Figure 29.1). This then is the discursive
explanation of how particular sorts of actions
become institutionalized.
In terms of the second point, the
development of a discursive perspective has
been also encouraged by an increasing
interest in institutional change. In the past
couple of decades institutional theory
has predominantly provided insights into
processes that explain institutional stability
rather than change and the emphasis
has been on how institutional pressures
(regulative, normative, cultural-cognitive)
force organizations to converge on a stan-
dard set of practices. Due to an over-
whelming concern with convergence, there
has been little attention toward unpacking
processes of how institutions are socially
constructed.
This question becomes crucial especially
in regard to how new institutions are created
and existing ones changed. Discourse is both
a source of stability and of change (Clegg,
Courpasson, & Phillips, 2006). Embedded in
the notion of discourse is the potential
for stabilizing social relations and as well
as acting as a source of social change.
As much as discursive practices reaffirm
and re-enact social structure, they also
provide an arena for contradictions and
conflicts (Clegg et al., 2006: 303). A discur-
sive framework, therefore, provides
an appropriate theoretical and empirical
ground to examine processes of institutional
change.
The issue of institutional change raises
another question: Are cognitive based institu-
tions and their creation different from coer-
cive and normatively based institutions? The
regulative, normative and cognitive pillars of
institutions have become taken-for-granted
in institutional theory but the relationship
between these aspects continues to be
ambiguous. Scott (2001: 51) posits ‘one pos-
sible approach would be to view all of these
facets as contributing, in interdependent and
mutually reinforcing ways, to a powerful
social framework’ but suggests that distin-
guishing among these elements may be more
useful. However, the focus is on effects of
 TAKING SOCIAL CONSTRUCTION SERIOUSLY
these different types of institutional pillars
rather than how they get created. Hoffman
(1997: 36) suggests that the three pillars form
a continuum ‘from the conscious to the
unconscious, from the legally enforced to the
taken-for-granted’. This raises the question:
Does the process of social construction
underlie that continuum? In a recent review
of developments in institutional theory even
Scott acknowledges that the three pillars are
found together but it is the cultural-cognitive
pillar that provides the ‘deeper foundations
of institutional forms ... the infrastructure
on which not only beliefs, but norms and
rules rest’ (2004: 5). This further raises
the question: Is the ambiguity surrounding
the relationship between the three types of
institutions due to the lack of an appropriate
theoretical and empirical lens to unpack it?
Extending the Discourse Perspective
on Institutions
So far, we have introduced discourse analysis
and explored how it can be used as a frame-
work to explain the social construction of
institutions. But what are the ramifications
of this for institutional theory? And what
are the next steps in the development of
the discursive perspective in institutional
theory? We will turn our attention to these
questions now. In particular, we will discuss
three areas with important ramifications
for institutional theory: changing the focus
of empirical research, reframing the sym-
bolic versus the practice debate, and bringing
society back in.
Changing the focus of empirical
research
First, a discursive perspective on institutions
and institutionalization leads to an important
change in the focus of empirical studies in
institutional theory. Rather than a focus on
the outcomes of institutional processes in
terms of increasing similarity across an
715
organizational field or on the impact of an
institutional change, a discourse perspective
refocuses attention on the process of institu-
tionalization itself. This is not to say that
existing and future studies on the effects of
institutions are any less valuable. Rather it is
simply to say that a new area of research
becomes available looking at the process of
institutionalization, how it unfolds in differ-
ent circumstances, and the roles of various
actors in the process.
From the perspective of a discursive
theory of institutions, the process through
which institutions come into being is empiri-
cally accessible. Researchers can follow the
production of texts looking for the appear-
ance of key concepts and understandings and
can therefore trace the production of institu-
tions as well as the processes through which
institutions change or are de-institutionalized
(Oliver, 1992). The focus on the appearance
of influential texts and the meanings that
these texts create as they accrete over time
provides a clear empirical approach to the
processes of social construction that underlie
institutional dynamics. Researchers can also
trace the impact of the activities of particular
actors by tracing the texts that they produce
and the impacts of these texts.
Reframing the symbolic versus practice
debate
A discursive theory of institutionalization
also has important ramifications for the sym-
bolic versus practice debate in institutional
theory. Where some theorists have argued that
institutions arise out of practices (e.g., Barley
& Tolbert, 1997), others have argued strongly
for a more symbolic foundation for
institutions (e.g., Zilber, 2002). Interestingly,
the discursive perspective takes us back to the
early formulations of Berger and Luckmann
(1967) in focusing on both symbols and
practices. Just as Berger and Luckmann pro-
posed that an institution is a practice made
meaningful through interaction, so too does
the discursive perspective focus our attention
on both the practice and how it is made
716 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
meaningful in discourse. It requires both to
make up an institution. An institution without
action makes no more sense than one without
meaning.
From this perspective then, we are search-
ing for a combination of the development of
patterned practices and the textual work done
to make the practices meaningful. This
process may be more or less intentional with
actors working to ensure that their preferred
meanings prevail but often these activities will
be overshadowed by factors endogenous and
exogenous to the discourse. Unravelling
this complex process becomes the task of the
institutional theorist interested in how institu-
tions come to be and why they are the way
they are.
Bringing society back in
Finally, taking social construction seriously
in institutional theory leads to important
questions regarding the relation between dis-
course at a field level and broader societal
discourses. In discourse theory, the question
of the relation between levels of discourse
(and to some degree the question of whether
‘levels’ is even the right metaphor) remain a
source of serious contention (e.g., Alvesson
& Karreman, 2000). At the same time, it is
clear that there are broader societal level dis-
courses that frame the sorts of discourses
which occur in organizational fields and the
discourse approach we are arguing for here
provides tools and a frame for considering
and exploring this interaction.
This question of levels of discourse has
obvious parallels to discussions of institu-
tional logics in institutional theory (e.g.,
Lounsbury, 2002). The interaction between
well-established societal discourse and dis-
course at the level of the organizational field
parallels the interaction of societal level
logics and the logics of fields. It therefore
seems possible that a discourse perspective
may shed some light on what is currently a
rather murky theoretical construct and on
how various levels of logics combine and
reinforce each other. While much more work
needs to be done in this area, we believe
there is real potential for illuminating the
complex processes and relationships that sur-
round institutional logics.
CONCLUSIONS
In this chapter, we have argued that discourse
analysis can contribute an important new
perspective to institutional theory. This is
unsurprising given that the two streams of
literature arise from a single source – the
linguistic turn in social science (Alvesson &
Karreman, 2000) – and that discourse analy-
sis seeks to understand the nature of the
processes of social construction that lie at
the heart of institutionalization. Interestingly,
the interest in social construction that charac-
terized the earliest forms of new institutional
theory in the work of Meyer and Rowan
(1977) has reappeared in several recent arti-
cles from different but related perspectives
highly sympathetic to social construction
such as Phillips et al. (2004), Suddaby and
Greenwood (2005) and Zilber (2006).
The increasing interest in a more balanced
perspective on change and stability as well
as structure and agency has necessarily led
to this increasing interest in the micro-
foundations of institutional processes.
In adding to the emerging discursive per-
spective in neo-institutional theory, we make
three main contributions. First, we explore
some of the ramifications of adopting a dis-
cursive perspective on the process of institu-
tionalization. While the process itself has
already been presented in some detail, the
theoretical ramifications of this perspective
have not been fully explored. Our argument
here is that a discursive perspective high-
lights the cognitive nature of institutions and
exposes the unresolved tensions around the
nature of an institution. We argue that they
are fundamentally cognitive and that they do
not involve external sanctions. We concur
with Jepperson (1991) that institutions are
self-reinforcing and external sanctions are
not part of institutional mechanisms.
 TAKING SOCIAL CONSTRUCTION SERIOUSLY
This leads to our second contribution.
If institutions are fundamentally cognitive,
then the three pillars framework of Scott
(2001), which has become so dominant in
institutional analysis, has been more limiting
than helpful in developing our understanding
of the nature of institutions. By combining all
of the mechanisms which can lead to isomor-
phism into the definition of an institution,
Scott has produced a framework which has
something for everyone, but it raises critical
theoretical and philosophical problems. In
mixing such different constructs, institutional
theory is left without any way of developing a
unified theory of institutionalization. The fact
that coercive and normative mechanisms are
externally managed by other actors makes
them very different from the taken-for-granted-
ness of cognitive mechanisms. Where coercive
and normative mechanisms result in strategic
action and often resistance, cognitive mecha-
nisms function by conditioning thinking.
Douglas (1986: 10) makes this argument very
clearly when she says that ‘[e]pistemological
resources may be able to explain what cannot
be explained by the theory of rational behav-
iour’. In other words, theories of rational
behaviour explain the responses of actors
to coercive and normative mechanism; cogni-
tive mechanisms explain something very dif-
ferent and this is the proper domain of
institutional theory.
Third, in reconnecting neo-institutional
theory with social construction we empha-
size the broad interest in culture and lan-
guage that has played such an important part
in new and neo-institutional theory. Even a
cursory examination of the literature reveals
a preponderance of empirical studies and
theoretical discussion focused on taken-
for-grantedness and the dynamics of the
underlying cognitive processes. The connec-
tion with discourse analysis provides new
opportunities for studying institutions and
institutionalization.
This leads to the final point of this chapter.
While much of our discussion has been about
the theoretical and philosophical ramifica-
tions of discourse analysis for institutional
717
theory, discourse analysis is also a research
method (e.g., Phillips & Hardy, 2002) with
important ramifications for empirical
research in institutional theory. We believe
there are three important areas that have par-
ticular potential. First, discourse analysis
provides an approach to exploring the micro-
dynamics of the production of institutions. In
particular, the initial production of a proto-
institution and then its subsequent diffusion
throughout an organizational field.
Second, as we have argued above, there are
two alternate explanations of institutionaliza-
tion: a behavioural one (Barley & Tolbert,
1997) and a textual one (Phillips et al., 2004).
Given the textually mediated context of
organizational fields, we argue that discursive
approaches are critical to understanding the
development of institutions but that a sensitiv-
ity to both behaviour and discourse is required
for a full understanding.
Finally, discourse analysis has an impor-
tant role to play in the ongoing exploration of
the interactions between different organiza-
tional fields and between broader societal
institutions and local fields. The methods
provided by discourse analysis allow
researchers to begin to explore the intertextu-
ality that characterizes these processes and
untangle some of the complexities of these
cultural systems.
In closing, we hope that the themes we
have explored in this chapter explain some of
our enthusiasm for the subject. We believe
that neo-institutional theory is at a crossroads
and risks in some ways trying to be every-
thing to everyone. While a multiplicity of
approaches and views is a sign of robust
health, it can also wear away at the infra-
structure that provided the impetus for dis-
cussion in the first place. In some ways,
perhaps we have overshot – in trying to move
away from a theory that was unnecessarily
narrow we have developed one that is
impractically broad. We believe that institu-
tional theory needs to return to its roots in
social constructionism and the well-spring of
creative thought that this produced. While
this will necessitate a narrowing of our
718 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
understanding of what an institution is, it
will also provide a renewed ability to under-
stand how they work. Zucker’s call to focus
on the micro-processes of institutional pro-
duction at the macro-level has been ignored
for too long!
NOTES
1 We use the term institutional theory in this
chapter to refer to the stream of literature running
from new institutional theory down through more
recent developments in neo institutional theory.
When we wish to differentiate between new and
neo institutionalism we will identify them explicitly.
References to other forms of institutionalism will be
made explicitly (e.g., old institutionalism or institu-
tional economics).
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Institutional Leadership: Past,
Present, and Future
Marvin Washington, Kimberly B. Boal and John N. Davis
INTRODUCTION
Since the early writings of DiMaggio and
Powell (1983), Meyer and Rowan (1977) and
Zucker (1987), many insights have been
gained under the broad umbrella of institu-
tional analysis. Constructs such as ‘isomor-
phism,’ ‘de-coupling,’ and ‘coercive
pressure,’ are now mainstream in much orga-
nizational theorizing. Recently, there have
been new terms coined to describe the grow-
ing interest in agency in institutional analy-
ses. Now, it is not uncommon to see phrases
such as ‘institutional strategy’ (Lawrence,
1999) and ‘institutional entrepreneurship’
(DiMaggio, 1988; Suddaby and Greenwood,
2005), to describe the behavior of individuals
and organizations that are attempting to
change the institutional landscape in a partic-
ular environment. In this chapter, we con-
tinue this line of inquiry, not by going
forward, but by stepping back and highlight-
ing the contribution of early work on exam-
ining agency in institutional analysis. Here,
we discuss and extend ideas around institu-
tional leadership.
It has been 50 years since Selznick
published his seminal work Leadership
30
in Administration. Many scholars have cred-
ited this work with ushering in discussions
of institutions as ‘organizations infused
with value.’ However, not only did Selznick
describe how organizations become institu-
tions, but he also described the characteris-
tics of leaders of these organizations.
Projects have since examined institutional
leadership (e.g., Kraatz and Moore, 2002).
Institutional leadership, ‘ the promotion and
protection of values’ (Selznick, 1957: 28)
is different from traditional leadership: ‘task
and person-oriented behaviors of leaders
as they attempt to provide guidance, support,
and feedback to subordinates’ (Boal and
Schultz, 2007). It is the concept of institu-
tional leadership that we examine in this
article.
In this article, we do three things. First, we
discuss Selznick’s original ideas about insti-
tutional leadership and the role they play in
institutionalization processes. We also review
the trajectory of his work, by examining the
work in the organizations and institutions lit-
erature that have built upon Selznick’s ideas.
Second, we extend his work by examining
the three functions of institutional leaders.
First, they manage the internal consistency of
722 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
the firm (Selzick’s notion of commitment to
the values and mission of the organization).
Second, they develop external supporting
mechanisms to enhance the legitimacy of the
organization. Third, institutional leaders,
overcome external enemies. We conclude by
suggesting a reconciliation between institu-
tional leadership and the work on traditional
(or organizational) leadership. Our core
argument is that organizational leadership, or
leaders inside of organizations, is(are)
based upon a notion of instrumental agency,
hierarchical and charismatic power, and typ-
ically uses a future leaning vision.
Institutional leadership, or leaders of organi-
zations, is(are) based upon a notion of
embedded or constrained agency, influence
or negotiated power, and typically uses a
backward-leaning vision meaning that the
vision is there to remind the organization of
the core values.
SELZNICK’S VIEWS OF
INSTITUTIONAL LEADERSHIP
Most scholars know of Selznick’s work
Leadership in Administration as providing
the famous definition of institutions as organ-
izations ‘infused with value.’ However, this
is a secondary concern with his work.
Selznick’s primary objective in Leadership
in Administration is to understand the behav-
iors and characteristics of those who lead
institutions and how these behaviors are dif-
ferent than the behaviors of those who lead
organizations. In Selznick’s own words ‘The
argument of this essay is quite simply stated:
The executive becomes a statesman as he
makes the transition from administrative
management to institutional leadership’
(1957: 4). This leads to his discussion of
institutionalization as a process; organiza-
tions become institutions over time. The
degree of institutionalization depends upon
the potential conflict between the leader’s
goals and group’s goals; the more precise an
organization’s goals and the more specialized
and technical its operations, the slower the
institutionalization process. Thus, to institu-
tionalize an organization is to ‘infuse with
value beyond the technical requirements of
the task at hand’ (1957: 17). This ‘infuse with
value’ statement is closely connected with an
organization’s concern with self-mainte-
nance (the organization’s desire to maintain
its existence beyond the technical require-
ments of the organization). Note the active
nature of the word institutionalize. Selznick
is suggesting the process of institutionaliza-
tion is a process that occurs as leaders
respond to the internal and external forces
that are placed upon organizations.
After describing what Selznick means by
institution, as opposed to organization, he
returns to his primary objective of describing
the role of institutional leaders in this
process. ‘Most of this essay will be devoted
to identifying and analyzing the chief func-
tions of institutional leadership’ (1957: 22).
He distinguishes the institutional leader as
separate from the interpersonal leader (what
might be described as the charismatic
or transformational leader). The interper-
sonal leader’s task is ‘to smooth the path of
human interaction, ease communication,
evoke personal devotion, and allay anxiety’
(1957: 27). The institutional leader’s task
however is ‘the promotion and protection of
values’ (1957: 28).
The first task Selznick describes is the cre-
ation and maintenance of the organization’s
character. Selznick suggests that leading an
institution:
is far more than the capacity to mobilize personal
support; it is more than the maintenance of
equilibrium through the routine solution of everyday
problems; it is the function of the leader-statesman –
whether of a nation or a private association – to
define the ends of group existence, to design an
enterprise distinctively adapted to these ends, and
to see that the design becomes a living reality.
These tasks are not routine; they call for continu-
ous self-appraisal on the part of the leaders; and
they may require only a few critical decisions over
a long period of time. (1957: 37)
It is these few critical decisions that create an
organization’s character.
 INSTITUTIONAL LEADERSHIP: PAST, PRESENT, AND FUTURE
The development of an organization’s char-
acter is a necessary step in the institutionaliza-
tion process of organizations. ‘The study of
organizational character-formation is, then, a
phase of institutional analysis. Here the
emphasis is on the embodiment of values in an
organizational structure through the elabora-
tion of commitments – ways of acting and
responding that can be changed, if at all, only
at the risk of severe internal crises’ (1957: 40).
To expand upon this point further, Selznick
draws upon his examples as diverse as the
Tennessee Valley Authority (Selznick, 1949)
and the Bolshevik Party (Selznick, 1952).
Selznick summarizes his arguments about
institutional leadership by suggesting that the
function of institutional leadership is inher-
ently political. ‘We have argued that policy
and administration are interdependent in the
special sense that certain areas of organiza-
tional activity are peculiarly sensitive to
policy matters. Because these areas exist,
creative men are needed ... These men are
called leaders; their profession is politics’
(1957: 61). However, he is not referring to
the political or power sense of the word pol-
itics but politics in the sense of consensus.
EXTENSIONS OF SELZNICK’S WORK
A search of ‘Leadership in Administration’
on Google Scholar generated over 750 cita-
tions. Of those citations, 170 have been in
Academy of Management Journal, Strategic
Management Journal, Administrative
Science Quarterly, Organization Studies,
Human Relations, Organization Science, and
Journal of Management Studies. Ironically,
fewer than 10 of the 750 citations were in
Leadership Quarterly (more on that later). In
this section, we examine how Selznick’s
ideas on institutional leadership have been
extended in the current literature. After that,
we speculate as to why Selznick’s concept of
institutional leadership hasn’t been more
prominent in the leadership literature: our
brief answer is that Selznick is concerned
723
with leadership of organizations and the lead-
ership literature is concerned with leadership
inside organizations.
Extensions that do not deal
with leadership
Most of the citations to Selznick’s 1957 book
are not about institutional leadership. Though
our search and analysis was not exhaustive,
from the articles that we did review, the
typical citation to Selznick’s work is his
description of institutions as organizations
infused with value (Selznick, 1957: 17).
Another major part of the literature that
builds on Selznick is his work on organiza-
tional commitments. Of the work that focuses
on institutional leadership, the top manage-
ment team literature refers to Selznick most
often. For example, in their work on cognitive
and affective conflict, Amason and Sapienza
(1997) argue that the greater agreement
among the top management team, the less
the affective conflict. They draw this support
from Selznick’s argument that ‘a central
function of top management is to create
super-ordinate goals that unite action and to
reward cooperative behavior towards those
goals’ (Amason and Sapienza, 1997: 502).
This is similar to the other work on top
management teams that draws from Selznick.
The leadership extensions
It is the work of Kraatz and Moore that most
exemplifies the extensions of Selznick’s
work on institutional leadership. Kraatz and
Moore’s (2002) study examines the role of
leadership migration in the institutional
changes of liberal arts college education.
They argued that, except for a few theoretical
statements about the role of leadership in
institutional change and the rare empirical
exception (Hirsch, 1986; Leblebici, Salancik,
Copay and King, 1991), the role of leader-
ship in institutional change has been neg-
lected over the past 40 years. Drawing from
724 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Selznick’s statement that a critical compo-
nent of institutionalization is the selection of
leaders from a homogeneous pool of candi-
dates, Kraatz and Moore examine three
mechanisms of how leadership changes lead
to institutional change: (1) knowledge
transfer and interorganizational learning;
(2) introduction of new mental models and
assumptions; and (3) attenuation or replace-
ment of institutional values (2002: 123).
Kraatz and Moore find support for their
hypotheses regarding the factors that allow
leadership migration to impact organiza-
tional change.
While this represents an exemplar in the
extension of Selznick’s work, other scholars
have also contributed to a better understand-
ing of institutional leadership. In a wonderful
study examining the role of CEOs, Tengblad
builds upon Selznick’s conception of the
institutional leader by defining the role of the
CEO as managing internal and external
expectations. In a replication of work by
Sune Carlson (Carlson, 1951), Tengblad
observed 8 CEOs for a total of 159 days. He
directly followed CEOs around for 26 days
(more than 300 hours) and had the CEOs
conduct self-recordings of themselves for
133 days. Tengblad focused his study on
understanding how CEOs handled financial
expectations. One of his key findings was the
increasing use of organizational culture as a
management and communication tool.
‘Messages about the desired state of affairs
(formulate, for instance, as ‘ten command-
ments,’ ‘cornerstones,’ ‘business mission’ or
‘corporate vision’) were transmitted through
booklets and brochures in most companies.
During the observations the CEOs made
numerous efforts to spread these messages’
(Tengblad, 2004: 592). Tengblad argued that
the CEOs in his study often resorted to using
the mission of the organization as a way of
communicating the financial expectations.
The CEOs did not just want to paint a ‘rosy
picture’ but wanted to demonstrate that they
were doing all they could to improve their
financial outlook. Internally, Tengblad found
that the CEOs used a variety of assessments
to evaluate the senior managers. These
assessments created a ‘carrot and stick’
(2004: 596) approach to managing internal
expectations. Similar to Selznick’s original
conclusions, Tengblad concluded that the
CEOs in his study spent enormous energy in
managing the external expectations of their
organizations. However, this management
process did not automatically lead to changes
to the organization.
By bringing institutional leadership back
to the forefront of institutional analysis, we
argue that institutional leadership might be
the reconciliation between the first wave of
institutional analysis which were more inter-
ested in a deterministic view of institutional-
ized action (DiMaggio and Powell, 1983)
and the calls for a more agentic view of insti-
tutions (Hirsch and Lounsbury, 1997).
Recently, authors have been calling attention
to a middle ground of institutionalized
action; institutional work (Lawrence and
Suddaby, 2006). By institutional work, the
concern is on how institutions maintain their
status and legitimacy in the face of their own
institutionalized environment. We argue that
the institutional leader’s role in maintaining
the legitimacy of their institutions warrants
renewed attention.
SO WHAT DO INSTITUTIONAL
LEADERS DO?
We argue that institutional leaders do three
things to maintain the legitimacy and sur-
vival of their institution. The first is that they
manage the internal consistency of the organ-
ization. This extends Selznick’s concepts of
leaders maintaining internal commitment to
the organizational values and mission. The
second is that institutional leaders develop
external supporting mechanisms that lead to
increasing legitimacy of their organization
(how organizations become institutions).
The third activity that institutional leaders
engage in is actions to overcome external
enemies.
 INSTITUTIONAL LEADERSHIP: PAST, PRESENT, AND FUTURE
Internal consistency
It is clear that institutional leaders play an
active role in developing the vision and mis-
sion of the organization. However, while
some scholars view the vision setting process
as a strategic or organizational function
(Boal and Schultz, 2007; Nutt and Backoff,
1997), from an institutional perspective,
vision setting is also inherently political.
Organizational visions give rise to stories,
myths, and ceremonies (Meyer and Rowan,
1977); they enable the organization to
remember the ‘good old days’ or to reinforce
some key values of the organization (Bolman
and Deal, 2003). Selznick describes one task
of institutional leadership that helps in the
institutionalization process as ‘the elabora-
tion of socially integrating myths’ (1957:
151). These myths are used to help ‘infuse
day-to-day behavior with long-run meaning
and purpose’ (1957: 151).
Gregory Berry (2001) notes, ‘Stories are a
fundamental way through which we under-
stand the world .... By understanding the sto-
ries of organizations, we can claim partial
understanding of the reasons behind visible
behavior’ (2001: 59). As such the exchange
of stories, rather than merely routines, allows
participants to develop a new ‘collective
story’ through which they can become a
social learning system. Stories are thus an
important part of establishing internal con-
sistency. Balancing the past, present, and
future through storytelling is an essential
skill for institutional leaders who hope to
promote it. It is in the creating, telling, and
retelling of key stories by institutional lead-
ers that the past, the present, and the future of
the organization are connected.
Creating and seizing upon ceremonies are
also in important part of maintaining internal
consistency (Bolman and Deal, 2003).
A great example of this is a speech given by
Douglas McArthur. General Douglas
MacArthur’s farewell address to the Corps of
Cadets at West Point, May 12, 1962, illus-
trates how institutional leaders symbolically
shape behaviors of individuals by capitalizing
725
on an important ceremonial tradition, the
annual presentation of the Thayer Award
(James, 1985: 678). ‘Duty, Honor, Country’ –
the cadet motto (Thomason, 1971: 43) – pow-
erfully defines historical identity and guides
behavior for the cadets of the U.S. Military
Academy and for graduates of the USMA for
the rest of their lives (Boal and Schultz, 2007;
Ellis and Moore, 1974):
Duty, honor, country: Those three hallowed words
reverently dictate what you want to be, what you
can be, what you will be. They are your rallying
point to build courage when courage seems to fail,
to regain faith when there seems to be little cause
for faith, to create hope when hope becomes
forlorn .... The code which those words perpetuate
embraces the highest moral law .... Its requirements
are for the things that are right and its restraints are
from the things that are wrong .... The long, gray
line has never failed us. Were you to do so, a mil-
lion ghosts in olive drab, in brown khaki, in blue
and gray, would rise from their white crosses, thun-
dering those magic words: Duty, honor, country.
(Duffy and Carpenter (1997: 197–200)
This speech is an example of institutional
leadership in two ways. The first is by notic-
ing what was not said. MacArthur’s speech
was more about character, mission, values of
the organization (hence its institutional char-
acter) than it was about tactics. Second, this
speech has been ‘retold’ countless times,
reinforcing the military’s commitment to
these values. For example, each year New
Cadets at the USMA are issued a personal
copy of Bugle Notes (Thomason, 1971). One
of the coauthors’ personal copy, which he
received on his first day at the USMA, con-
tains this dedication:
To the men who join the corps in 1971, 169 years
after its beginning, this book is dedicated. Bugle
Notes is the story of the Long Gray Line. Within these
pages can be found the reasons for the greatness
and esprit of those who have graduated from West
Point. Herein lie the relationships of the corps to the
United States, the Army, and itself. These are the tra-
ditions held sacred by every West Pointer; they are
your heritage. Cherish them, and pass them on to
those who will follow after you. (1971: 1)
In the heart of this copy of Bugle Notes
(Thomason, 1971: 108–118) is printed the
726 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
complete text of MacArthur’s speech, a
deliberate effort to infuse with value the
army of the future by connecting it to the
army of the past.
We suggest that institutional leaders take
part in building an autobiographical pattern
of historical accounts of their organization to
produce a coherent picture of an organiza-
tion’s identity, their own roles within their
organization, and the realities of organiza-
tional life, while also preparing the organiza-
tion to effectively respond to future
environmental changes. There are a number
of possible ways in which institutional
leaders might organize events into a coherent
pattern producing an overarching institu-
tional narrative. In their work on the
individual-level life story construct, Bluck
and Habermas (2000) suggest thematic
coherence as an important part of the indi-
vidual and institutional story creation
process.
Thematic coherence is useful in compre-
hending periods of organizational transition,
such as Andrew Grove’s concept of strategic
inflection points (1996, 1997). ‘Strategic
inflection points are caused by fundamental
industry dynamics, technologies, and strate-
gies that create new opportunities for institu-
tional leaders to develop new visions, create
new strategies, and move their organizations
in new directions as they traverse through
turbulence and uncertainty’ (Boal and
Hooijberg, 2000: 520). Strategic inflection
points may be virtually impossible to detect a
priori, but by maintaining thematic coher-
ence, institutional leaders impose their own
sense on successes and failures in the face of
extreme uncertainty.
One theme that is frequently used by insti-
tutional leaders to establish meaning for their
followers is the concept of the hero’s journey.
Coined by Joseph Campbell in his book, The
Hero with a Thousand Faces (1972), he
argued that all myths, regardless of the cul-
ture that produced them, shared the same
basic narrative features and structure. Central
to his view of myth is the figure of the hero,
his or her journey or struggle in adventure,
and eventual return or arrival in victory.
Shamir and his colleagues (2005), in their
analysis of the narrative accounts, found that
the theme of struggle was common among
leaders. Through battles and ordeals, leaders
saw themselves transformed, thereby attain-
ing the power to assume the task of leader-
ship. One of the insights that Bluck and
Habermas (2000) provide is that one source
of an individual’s motivation is the sense of
self that the life story provides. The themes
and order that structure life events in the cre-
ation of the life story schema set the rationale
for behavior across time, and guide future
goals and actions by their linkage with that
life story model.
Beyond being an expression of their own
identity, institutional leaders use their life
stories in an effort to influence their follow-
ers, by framing expectations and impres-
sions, serving as a role model, showing the
legitimacy of their leadership role, and shap-
ing collective expectations and meanings
(Shamir et al., 2005). By extension, a shared
organizational life story provides the inspira-
tion for collective behavior among members
by connecting it with the past through the
organization’s history. In establishing the
rationale behind the organization’s life story,
the schema generates an organizational iden-
tity that insures continuity between past and
future goals and actions. Looking at the
development of an effective leader vision,
Strange and Mumford (2005) found that
vision emerged in a process where leaders
reflected on the fortunes of past goals and
behaviors in deriving mental models for the
future. The vision formation process causes
leaders to use a descriptive mental model of
the organization – one that articulates the
themes and relationships between actions
and outcomes – and by assessing that model
in light of organization members’ experience,
to then devise a prescriptive model for situa-
tions yet to be encountered. Storytelling and
the coherence demanded by the structure of
the life story schema combine in the ongoing
vision formation process occurring within
organizations.
 INSTITUTIONAL LEADERSHIP: PAST, PRESENT, AND FUTURE
The enduring values, expectations, and
responsibilities that maintaining coherence
produces for the organization – and which are
manifested in its vision – show the opportunity
that institutional leadership has in defining an
organization’s approach to future circum-
stances. Although all individual members are
‘coauthors’ of an organization’s life story
(Czarniawska, 1997: 14), powerful individu-
als, such as institutional leaders, can produce
narratives for which the rest of the organization
is more of a passive audience. Control over
storytelling and the way members interpret an
organization’s path over time allows control
over the vision formation process, and should
significantly influence the character and effec-
tiveness of organizational mission. Although
many individuals may possess experience rel-
evant to the development and evaluation of
past mental models of the organization, insti-
tutional leaders have a unique position from
which to influence this critical feedback mech-
anism in the vision-formation process. The
background and past experiences of the
leader is influential in developing descriptive
mental models and the leader’s experience
with those models as they confront the
demands of current organizational situations
influences their current mental models.
An institutional leader’s own life story,
thus, enters into the vision formation process
along with the life story of the organization
itself and its members. The requirement for
coherence in both organizational and leader
life stories means that an institutional leader
imparts much of their own meaning and
sense-making onto the organization; actions
and events are interpreted through the lenses
of thematic and causal coherence in the con-
text of the histories of both the organization
and the institutional leader. When Jack Welch
was the head of General Electric he taught
a course on Leadership and Values seven
times a year to high-potential middle man-
agers. In addition, courses were taught by the
vice-chairman and the CFO. In fact, corpo-
rate leaders taught 60 percent of the senior-
level courses, with Welch often standing in
front of the group (Greiner, 2002).
727
External supporting mechanisms
Another task that institutional leaders perform
is to develop external supporting mechanisms
in order to maintain survival and obtain legiti-
macy for the organization. Organizational
survival requires maintaining a balance
between stability and flexibility (Brown and
Eisenhardt, 1998). Vision setting and story-
telling are excellent mechanisms to maintain
internal consistency and produce stability in
an organization. Without stability a firm
would not be able to accumulate knowledge,
and would be in a constant state of flux, never
being able to move any distance from its
original founding because the organization
would have no basis to evaluate every new fad.
Institutional leaders overcome this inertia
problem by serving as cognitive network
brokers (Burt, 1992). By interaction with a
wide range of networks, inside and outside the
boundaries of the firm, individuals are encour-
aged to bring new ideas/schema to old prob-
lems as well as discover new problems to
which known or knowable shared schema can
be applied (Kraatz and Moore, 2002).
One of the ways that institutional leaders
ensure their survival is to maintain their legit-
imacy. In Suchman’s (1995: 574) definition,
legitimacy is the ‘generalized perception that
the actions of an entity are desirable, proper,
or appropriate within some socially con-
structed system of norms, values, beliefs
and definitions.’ Institutional theory helps
us to understand that as companies are
embedded in the economic and institutional
environment, we can infer the cultural mean-
ings, ideals and norms that have been
socially accepted in a society. These norms
can be seen as flexible guidelines that com-
panies must maintain in order to achieve con-
gruence with society and in the legal
environment.
Organizations and their associated prac-
tices are built upon three types of legitimacy
(Scott, 2001). A new practice is normatively
legitimate when it is consistent with
wider societal values. Regulatory legitimacy
is conveyed when existing rules and laws
support a new practice. A new practice is
728 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
culturally/cognitively legitimate when it is
connected to wider belief systems inside of
the institutional environment. When an
organization is endorsed and supported by a
segment of society large enough to ensure its
effectiveness and survival it can be consid-
ered to be legitimate (Pfeffer and Salancik,
1978), and as such, the organization only
needs to be supported by a segment of a pop-
ulation in order to remain legitimate in the
presence of attacks from external sources. As
organizations utilize socially acceptable pro-
cedures to conduct potentially controversial
activities, the organization can manage the
impression that it is rational and legitimate
(Scott, 1987).
Selznick himself recognized the relation-
ship between institutional leaders and the
legitimacy of the institution they are attempt-
ing to lead. To understand the nature of insti-
tutional leadership, we must have some
notion of the meaning and significance of the
term ‘institution’ itself’ (1987: 4). This leads
to the discussion of the differences between
institutions and organizations. Organizations
are ‘a rational instrument engineered to do a
job’ (1987: 5). An institution is ‘a natural
product of social needs and pressures – a
responsive, adaptive organism’ (1987: 5).
The pressures of institutions come from two
sources: external, or the wider environment,
and internal, or the inner workings of the
organizations. Using examples of the mili-
tary and the Catholic Church, Selznick
describes how these pressures produce
administrative ideologies useful as commu-
nication and self-defense techniques, the cre-
ation and the protection of elites, and the
emergence of contending interest-groups.
Selznick argues that the diversity of forces
has a unifying effect in that they define the
‘commitments of the organization and give it
a distinctive identity’ (1957: 16).
Rao (2002) also identifies strong individu-
als as ‘evangelists’ for a practice, alluding to
the significant of a singular powerful actor
who drives the legitimation of a practice
much like a religion or ideology. Rao’s termi-
nology most aptly signifies an important
component of institutional leadership at the
individual level, specifically, the strong
adherence to a set of principles that drive the
actions of the individual. These pieces
(among others) serve to identify and
construct the external version of an institu-
tional leader – an individual who utilizes
institutional supporting mechanisms, exist-
ing governance mechanisms and cognitive
frameworks to alter power arrangements
through explicit institutional strategies.
In a recently published dissertation,
Patterson (2007) extends the idea of institu-
tional leader as evangelists in her examina-
tion of D.D. Palmer and his efforts to create
the field of chiropractic medicine. She exam-
ined how Palmer created Palmer Chiropractic
College to gain legitimacy for chiropractic
medicine. Her work shows the link between
the creation of chiropractic colleges and the
growing support and cognitive legitimacy of
chiropractic medicine.
Drawing from the work in institutional
theory, we argue that institutional leaders per-
form two tasks to gain external legitimacy for
their institution. First, institutional leaders
develop supporting mechanisms (Washington
and Ventresca, 2004) that help to maintain
their existence and sustain the acceptance and
use of the practice. These supporting mecha-
nisms commonly take the form of state or
normative support for particular practices.
Drawing from Scott’s three pillars of institu-
tionalism, these practices could be the devel-
opment of an association, interest group, or
lobbying group to impact the normative or
regulative aspects of the environment
The second process recalls the major con-
tribution of Berger and Luckman (1967) in
that institutional leaders strive for wide-
spread social acceptance of their organiza-
tion. Stigmatized practices are very difficult
to institutionalize because they are generally
contested. This aspect provides boundaries to
tease apart how an organization might have
established supporting mechanisms yet never
gain widespread social acceptance (prostitu-
tion, drug use, and same-sex marriage would
be examples of such institutions).
 INSTITUTIONAL LEADERSHIP: PAST, PRESENT, AND FUTURE
An example of this type of institutional
work would be the efforts of Captain Palmer
E. Pierce. As the first president of the
National Collegiate Athletic Association
(NCAA), he worked to eliminate the vio-
lence in college football which was causing
numerous deaths (Falla, 1981). The violence
in football was so bad that many schools
abandoned the sport or switched to the less
violent sport of rugby (Smith, 1988). His
efforts not only helped to reduce the vio-
lence, but also helped to grow the member-
ship of the NCAA. Founded in 1906 with
only 38 member schools, by 1942 the NCAA
had 314 schools which included ‘nearly
every college or university of importance in
the country’ (Stagg, 1946: 81).
Overcome external enemies
The final task of institutional leadership is
overcoming external enemies. Institutions
don’t exist in a vacuum. Friedland and Alford
(1991) suggest that organizational fields oper-
ate under diverse belief systems that differ
fundamentally in their content, as well as the
nature of central assumptions and ordering
principles that they refer to as institutional
logics. However, Washington, Forman,
Suddaby, and Ventresca (2005) argue that
there could be multiple institutions competing
for control over the organizational field. These
competing institutions have different sources
of interest and identities. Much like the insti-
tutional leaders of the NCAA defending their
institutions against the NAIA, AAU, and
AIAW (Washington, 2004; Washington,
Forman, Suddaby, and Ventresca, 2005) we
argue that institutional leaders also have to
defend against external enemies.
Where will the attack come from? First,
we argue that leaders have to defend against
the death of their existing practice. Oliver
(1992: 581) argues that ‘threats to the persist-
ence of an institutionalized practice may be
explained by a decline in .... the functional
necessity of the practice.’ These threats can
come from political pressures (changes in
laws, or regulations) technical pressures
(innovative practices) or social practices
729
(other organizations have stopped perform-
ing the practice). Patterson (2007) identified
the attacks on chiropractic medicine as
coming from traditional medicine in the form
of basic science laws. These laws were put in
place as a form of regulation against anyone
practicing medicine; all medical practitioners
regardless of specialty had to pass a set of
science requirements that the traditional
medicine community knew chiropractors
could not pass.
Another attack comes from fragmentation
of the population that originally institutional-
ized the practice (Zucker, 1987). Institutions
are only legitimate for a given population or
segment of society. If the population splits,
either politically as organizations within the
population fight over jurisdiction, or socially,
the supporting populations create niche popu-
lations, then support for that practice may
wane. We also argue, extending the work of
Zucker (1987) and Greve (1995), that an
organizational practice comes under attack as
other actors choose to invest in a competing
practice. Here we contend that there is com-
petition among practices to become institu-
tionalized. Thus, if a set of actors decide to
institutionalize a second practice, this might
in fact de-institutionalize the first practice.
In short, we argue that institutional leaders
are involved in their own institutions’ work
of maintaining survival. The activities of the
institutional leaders range from vision set-
ting, storytelling, network brokering to
defending the practices of their institution.
Future research could empirically test these
ideas by examining the practices of institu-
tional leaders. In the next section we return to
one problem that plagued us as we conducted
our literature review of institutional leader-
ship; why is there a lack of institutional lead-
ership ideas in the leadership literature?
Reconciling leadership research
with leadership in administration
A surprising result of our review of
how Selznick’s work has been cited in
730 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
management research was the relative
absence of Selznick’s work in the traditional
leadership literature. Of more than 750 cita-
tions to Selznick’s work, fewer than 10 were
from Leadership Quarterly – the preeminent
journal focused on leadership. This is sur-
prising to us given that all of the articles in
The Leadership Quarterly are about leader-
ship. Yet we found only 10 articles out of
more than 250 articles published since the
founding of The Leadership Quarterly that
even cited Selznick and usually he was not
central to their arguments.
Selznick’s work is similarly absent in
other leadership texts. Stogdill’s classic
Handbook of Leadership (1974: 28) contains
only one mention of Selznick, a single sen-
tence listing Selznick among those who treat
address leadership by classifying its func-
tions. Yukl’s (2002) advanced leadership
textbook, Leadership in Organizations, con-
tains no mention of Selznick (1957). Not
only is there a relative lack of Selznick in the
academic literature, but there is also a lack of
Selznick in leadership textbooks. Using an
admitted convenience sample of two popular
organizational behavior textbooks, we found
the following: Robbins and Judge’s (2007)
Organizational Behavior contains two chap-
ters (of nineteen) on leadership and classifies
both chapters at the group level of analysis.
Robbins and Judge contains no mention of
Leadership in Administration. Similarly, a
‘core concepts’ organizational behavior text-
book, Schermerhorn, Hunt, and Osborn’s
(2004) Core Concepts of Organizational
Behavior contains one chapter (of nineteen)
on leadership, considers leadership as an
organizational process, and does not mention
Selznick in its index.
Perhaps the problem is the traditional aca-
demic classification of leadership as an orga-
nizational behavior topic. Considering the
perspective in Selznick (1957), maybe we
would be better off to consult the treatment of
leadership in organization theory textbooks.
However, we found similar results in a simi-
lar sample of popular organization theory
textbooks. Daft’s Organization Theory and
Design (2004) has no chapter (of thirteen)
primarily on leadership, considers leadership
primarily as a process, and does not mention
Selznick in its index. Bolman and Deal’s
(2003) somewhat less traditional Reframing
Organizations has one chapter (of twenty-
one) dealing primarily with leadership, takes
a less traditional integrative perspective on
leadership, and mentions Selznick only in
conjunction with a discussion of the symbolic
frame of organizational culture.
Leadership studies have enjoyed a
renaissance in the past two decades, thanks
primarily to the shift to the transforma-
tional/charismatic perspectives (Hunt, 1999).
Yet a partial result of this renaissance has
been what Hunt and Dodge (2000) called
‘leadership déjá vu all over again.’ That is,
neglect of historical antecedents in the lead-
ership literature has caused an overemphasis
on concepts that exploit the spirit of the
times. Less charitably, this neglect generates
leadership fads. Similarly, Bedeian and Hunt
(2006), in a recent effort to tease out essential
differences between leadership and manage-
ment, went even further, questioning whether
the long-standing confusion between leader-
ship and management in both popular and
academic understandings of leadership has
led to the need for a complete reconceptual-
ization of leadership. Selznick’s (1957) work
may thus be positioned for another ‘shot’ at
influencing the field of leadership.
Lowe and Gardner (2000), in their sum-
mary and evaluation of the first ten years of
The Leadership Quarterly, categorized the
articles from that journal’s first decade in to
the following categories: trait theories,
behavioral theories, contingency theories,
multiple-level approaches, neo-charismatic
approaches, leadership and information pro-
cessing, other prominent approaches (e.g.,
romance of leadership, top management
teams), and new directions (e.g., political
leadership, strategic leadership). Their table
(2000: 477–479) of leadership paradigms
and theories identified only one article on
institutional theory and classified it among
‘other prominent approaches.’
 INSTITUTIONAL LEADERSHIP: PAST, PRESENT, AND FUTURE
In the early days of The Leadership
Quarterly, however, there was a strong
‘taste’ for institutional leadership.
Birnbaum’s (1990) article, published in the
first volume of The Leadership Quarterly,
was an excellent analysis of how college and
university presidents assessed their own
effectiveness. The question goes to the heart
of our argument that institutional leaders
create external supporting mechanisms and
overcome external enemies. He found that
the presidents in his sample used institutional
performance and constituent (key stakehold-
ers) satisfaction. For our purposes, this arti-
cle represents the type of work that we think
there should be more of. More work on insti-
tutional leaders needs to examine the
processes by which leaders lead organiza-
tions, not examine the traits, behaviors, and
characteristics of leaders.
We, along with others, argue that the lack
of inclusion of Selznick’s work on institu-
tional leadership is due to leadership’s focus
on leadership inside of organizations
(Biggart and Hamilton, 1987; Boal and
Hooijberg, 2000; Dubin, 1979; Hunt, 1999).
‘Theories of leadership have tended to focus
on the characteristics of leaders, on the
behaviors leaders exhibit, or on the situa-
tional factors that determine effective
approaches to leadership. Early research on
leadership attempted to identify the attributes
of great leaders, such as Napolean and
Washington, that set them apart from “lesser”
persons (Biggart and Hamilton, 1987:
430–431).’ The leadership literature classi-
fies these types of studies as supervisory the-
ories of leadership. ‘Supervisory theories of
leadership, (e.g., path-goal, contingency,
Leadership Menber Exchange) focus on
tasks and person-oriented behavior of leaders
as they attempt to provide guidance, support,
and feedback to subordinates’ (Boal and
Hooijberg, 2000), while institutional leader-
ship is concerned with the leadership of
organizations.
Table 30.1 summarizes our arguments
about the relationship of institutional leader-
ship and organizational leadership. We have
731
argued that institutional leaders operated
within an embedded agency perspective.
While actions are not totally determined by
the institutional constraints of the organiza-
tion, these missions and values of the institu-
tion do reduce the degrees of freedom of the
leader. An organizational leader however, is
less constrained. In much research, it is the
risk-taking part of being a leader – stepping
outside of the organizational boundaries –
that is often the difference between managers
and leaders (Hacker and Washington, 2007).
The view of constrained agency is connected
to the tactics of influence and negotiation for
the institutional leader. Keeping the institu-
tion on track requires the institutional leader
to develop political skills. This is in sharp
contrast to the organizational leader that uses
either their position or their charisma to ‘get
things done.’
One of the sharpest distinctions between
institutional leaders and organizational lead-
ers is their use of a vision statement. For
an institutional leader, the vision is a chance
to embed the values and mission of the
organization into the everyday reality. For an
organizational leader, the vision is a chance
to look forward to future challenges and
developments.
In this section we argue that both the leader-
ship literature and the institutional theory liter-
ature can benefit from a return to Selznick’s
ideas about institutional leadership. Most
scholars would put Selznick in the ‘old insti-
tutional theory’ category. However, with the
growing calls to incorporate more agency in
new-institutional studies (Hirsch and
Lounsbury, 1997) Selznick’s ideas might offer
a theoretical advance of the current institu-
tional theory literature. The old literature on
institutional theory focused on concepts of
isomorphism, legitimacy and diffusion. While
these are three different ideas, they all share a
common trait in that you can examine issues of
isomorphism, legitimacy, and diffusion without
looking inside of the organization. All three
ideas lend themselves wonderfully to the ‘now
legitimate’ use of event history analysis where
researchers develop variables that measure
732 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM

Table 30.1 Summary differences between institutional leadership and

organizational leadership
Differences between the Institutional leadership
two concepts
Type of agency Muted, constrained
‘Here the emphasis is on the
embodiment of values in an
organizational structure through
the elaboration of commitments –
ways of acting and responding
that can be changed, if at all,
only at the risk of severe internal
crises’ (Selznick, 1957: 40)
Power Influence, negotiation
‘Because these areas exist, creative
men are needed ... these men are
called leaders; their profession is
politics’ (Selznick, 1957: 61)
The role of vision Reconnect the organization to the
original values
‘The promotion and protection of
values’ (Selznick, 1957: 28)
Organizational leadership
Instrumental, rational
‘Early research on leadership attempted
to identify the attributes of great
leaders, such as Napoleon and
Washington, that set them apart
from “lesser” persons’ (Biggart and
Hamilton, 1987: 430–431)
Hierarchical, charismatic
‘Supervisory theories of leadership ... focus
on tasks and person-oriented behaviour
of leaders as they attempt to provide
guidance ... to subordinates’ (Boal and
Hooijberg, 2000)
Move the organizational forward
to new goals and challenges

institutional concepts and then examine how
these variables impact the adoption of a partic-
ular factor that represents legitimacy, diffusion,
or isomorphism. While there are wonderful
studies that use this approach to studying insti-
tutionalism, these studies are losing their
prominence in institutional analysis.
Recently, there has been work focusing on
institutional strategy (Lawrence, 1999), insti-
tutional entrepreneurship (DiMaggio, 1988;
Suddaby and Greenwood, 2005; etc.) and
institutional work (Lawrence and Suddaby,
2006). These concepts all share an interest
in the more micro-processes of institutionali-
zation. How do institutions compete for pri-
macy in a new field? How do new practices
become institutionalized? How are institu-
tions created, maintained and disrupted?
These are the new questions in institutional
theory. Answers to these questions can be
found by returning to the study of leaders.
The argument is not that leaders are fully
rational (or even boundedly rational) and
make strategic decisions. The argument is
that leaders do things, they make sense of the
environment, and they are involved in the
politics of organizational decisions and
would represent a key part of the puzzle to
understanding institutional phenomena. We
argue that more work similar to that by
Kraatz and Moore (2002) should be done.
This type of work is also being called for in
the leadership literature.
CONCLUSION
While we have focused on institutional lead-
ership, we do not think all leaders are institu-
tional leaders. Thus, we have two boundary
conditions of institutional leadership.
First, not all organizations are institutions.
In addition to understanding institutional
leadership, Selznick also informs of as to
how we should study institutions.
The study of institution is in some ways compara-
ble to the clinical study of personality. It requires a
genetic and developmental approach, an emphasis
on historical origins and growth stages ... Our
 INSTITUTIONAL LEADERSHIP: PAST, PRESENT, AND FUTURE
problem is to discover the characteristic ways
in which types of institutions respond to types of
circumstances. The common-sense distinctions
among enterprises according to whether they per-
form economic, political, religious, or military func-
tions. (1957: 141–142)
We think that institutional and organizational
theorists need to be more precise in describ-
ing the collective they are studying; what is it
about a particular collective that leads one to
call it an institution as opposed to an organi-
zation, group, practice, or association.
Second, not all leaders of institutions are
institutional leaders. Institutional leaders’
focus is on maintaining homeostasis. As
opposed to institutional leaders, leaders of
institutions (as well as leaders of organiza-
tions, associations, and practices) are charac-
terized as administrators or managers, and
their concern is with the technical core of the
organization and its functioning.
We have argued that to infuse the organi-
zation with value, institutional leaders
must do three things. First, they must
management internal consistency. We sug-
gest they do this through the telling of
stories and the management of thematic
coherence. Second, we argue that institu-
tional leaders develop external supporting
mechanisms that lead to increasing legiti-
macy of their organizations. They do this by
serving as cognitive network brokers
enabling a wide range of interaction inside
and outside the organization. Third, institu-
tional leaders must overcome external
enemies. To do so, institutional leaders
must defend against the death of existing
practices, and prevent fragmentation of the
population that originally institutionalized
the practice.
Finally, we note that, despite the enormous
intellectual contributions to understanding
organizations, institutions, and leadership,
Selznick has gone relatively unnoticed by
those who study leadership. We hope that
as researchers start to focus on the leadership
of organizations, rather than leadership in
organizations, this will lead future leadership
scholars to a rediscovery of his insights.
733
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 SECTION V

Reflections

Is the New Institutionalism
a Theory?
Donald Palmer, Nicole Biggart and Brian Dick
INTRODUCTION
The new institutionalism (NI) developed
in the 1970s at a time when an increasing
number of scholars studying organizations
began to embrace the notion that much of
what happened inside organizations had little
to do with the objective tasks in which organ-
izations were engaged and much to do with
the social relationships in which they were
embedded. This focus on the larger social
structure in which organizations are situated
was a huge intellectual leap over the manage-
rialist engineering approach to organizations
that accompanied the post WWII economy.
Dominated by industrial engineers, organiza-
tional analysts had difficulty conceptualizing
social elements of organizing beyond the
psychological traits of workers and the orga-
nizational structures that conditioned their
interactions. While some organizations-
environments scholars, such as resource
dependence theorists and population ecolo-
gists, focused on the resource environment of
organizations (e.g., Pfeffer and Salancik
[1978]/2003; Hannan and Freeman 1977;
Aldrich and Pfeffer 1976), proponents of the
31
new institutionalism focused their attention
on norms and mandates such as laws and reg-
ulations, belief systems, cultural pressures
and social comparison processes (e.g., Meyer
and Rowan [1977]/1991; Powell and
DiMaggio [1983]/1991). The new institution-
alism helped to explain why organizations
often looked alike, even if they were engaged
in quite different activities in varied contexts,
and why managers would adopt administra-
tive practices developed in dissimilar indus-
tries. It recognized that organizing is not only
about reaching for technical efficiency in get-
ting the job done, but also about presenting
one’s organization and management as
‘informed,’ ‘up-to-date,’ and ‘compliant.’
In the 1980s W. Richard Scott wrote
an assessment of the new institutionalism,
an approach that was very much in ascen-
dance at the time. In ‘The Adolescence of
Institutional Theory,’ Scott (1987) appraised
a theoretical teenager, albeit one with a
distinguished ancestry, to assess the NI’s
contributions thus far and the potential
for further development and intellectual
gifts. In concluding his assessment, Scott
(1987: 510) wrote that ‘[t]hroughout, I have
740 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
attempted to sound an optimistic note.
Institutional theory is at an early stage of
development. Adolescents have their awk-
wardness and their acne, but they also embody
energy and promise. They require encourage-
ment as well as criticism if they are to channel
their energies in productive directions and
achieve their promise.’
Some twenty-five years later, institutional
theory is still very much with us. No longer
an adolescent, it is reaching adulthood (Scott
forthcoming) and has become part of the
organization theory community alongside
resource dependency, population ecology,
the resource-based view of strategy, and a
few other stalwart conceptualizations that
help us to understand the dynamics of a
world organized into firms, NGOs, agencies,
and industries. Indeed, the new institutional-
ism is arguably now the dominant paradigm
in organization studies (Mizruchi and Fein
1999; Gmür 2003). But has its adolescent
promise been realized? Although Jennings
and Greenwood (2003: 201) consider the
new institutionalism to be ‘a mature theory,’
they contend that it still ‘relies more on
richness and relevance than rigor.’ A more
cynical appraisal might be that the new insti-
tutionalism represents merely an umbrella
for a diverse array of theory and research
seeking a legitimate pedigree. There are
many ways to assess a theoretical program’s
progress. In this essay we assess the extent to
which the new institutionalism has become
a ‘theory’ as opposed to a more loosely
organized perspective or framework. We
adopt this metric, because arguably the most
frequently stated goal of work in our field is
to develop theory about organizations rather
than simply adding to our knowledge of
them. Indeed, in many journals, the absence
of a theoretical contribution is grounds for a
submitted manuscript’s rejection (cf. the
notice to contributors for Administrative
Science Quarterly).
We use a conception of theory building
‘in use’ by organizational studies scholars as
our benchmark against which to evaluate
the new institutionalism. Concrete in-use
conceptualizations are more relevant to
practicing organization studies scholars than
are abstract normative models (cf. Cohen
1968). We use the conception of theory
building advanced by Edward Litchfield and
James D. Thompson, two influential figures in
the emergence of the field of organization
studies, as our in-use theory building bench-
mark. We think that most organization
studies scholars have been guided by their
implicit affinity for this framework. Further,
we think it represents the kind of theory
building that some contend holds the most
promise. DiMaggio (1995) has recently
identified three types of theory in use,
covering law theories, narrative theories, and
enlightenment theories, each of which has
strengths and weaknesses. Covering law
theories consist of generalizations that
describe the world as we see and measure
it; that is, they explain what the world is
like. Narrative theories consist of accounts
that explain the way the world works;
that is, they explain how and why the world
is like it is. Enlightenment theories are
complex, defamiliarizing and rich in
paradox aimed at clearing away conventio-
nal notions to make room for artful and
exciting insights; that is, they are ‘surprise
machines.’ DiMaggio contends that the best
theory building approaches tend to be hybrids,
which draw on different types of theories
in combinations where the strengths of
one counterbalance the weaknesses of the
others. Litchfield and Thompson’s suggested
mode of theorizing represents a hybrid of
the covering law and narrative approaches.
We recognize, though, that the Litchfield
and Thompson characterization of theory
is open to question. Thus, we conclude our
chapter by examining conceptions of theory
that have been offered in opposition to the
dominant view: social mechanism, postmod-
ernism, and critical realism. In each case,
we inquire into the extent to which the
new institutionalism has come to resemble
a theory in that particular conception’s
sense and how these alternatives might
enlighten the NI.
 IS THE NEW INSTITUTIONALISM A THEORY?
LITCHFIELD AND THOMPSON’S
VISION OF ORGANIZATION THEORY
The first issue of Administrative Science
Quarterly contained essays by two of the
journal’s founders, Edward Litchfield (1956)
and James Thompson (1956). In these
essays, Litchfield and Thompson laid out a
common vision of organization theory that
contained four elements. Organization
theory, first, should be composed of abstract
concepts that can be operationalized and pos-
tulated relationships that can be empirically
evaluated. Second, it should be general, tran-
scending different types of organizations and
contexts. Third, organization theory should
be comprehensive, pursuing multiple levels
of analysis, drawing on a wide array of the
social sciences, and apprehending the full
range of behavior in and of organizations.
Finally, it should be cumulative, growing in
explanatory power over time.
Concepts and relationships
Litchfield and Thompson complained that
organization theory in their time was charac-
terized by a plethora of vague concepts that
were ambiguously related to one another and
that researchers often documented empirical
regularities without providing a theoretical
framework within which they could be inter-
preted. They contended that organization
theory should aspire to develop a coherent set
of abstract constructs that could be opera-
tionalized and postulated relationships that
could be empirically verified. An examina-
tion of Thompson’s ([1967]/2006) classic
integration of contemporary organization
theory suggests that he at least also envi-
sioned organization theory to include not just
‘covering laws’ but causal explanations of
such relationships. Almost forty years later,
Sutton and Staw (1995) presented a strik-
ingly similar conception of organization
theory as a logical framework that explained
‘why variables or constructs come about or
why they are connected’ (1995: 375).
741
Concepts
The new institutionalism is characterized by
a growing number of concepts. These con-
cepts can be grouped into three categories:
institutional structures, attributes, and
processes. We review what we believe are
several key new institutional concepts, with
an eye to indicating the extent to which they
are well elaborated and operationalized. We
do not aspire to completeness. There are
many more new institutional concepts than
those we consider in this section of the chap-
ter. Rather we aspire to representativeness,
with respect to the level of precision with
which the concepts have been elaborated and
operationalized.
Structures The most fundamental NI struc-
tural concept is the ‘institution,’ which corre-
sponds to a way of organizing human activity
that is stable, resilient, and hence relatively
enduring because it is considered appropriate
by relevant actors, in particular powerful
ones. Institutions can have a sense of perma-
nence that makes it almost unimaginable that
they could ever be different or might at one
time not have existed. The taken-for-granted
nature of institutions is part of their power –
they are often not called into question or
examined for their efficacy or appropriate-
ness (Meyer and Rowan ([1977]/1991: 44–5;
Scott forthcoming). According to Scott
(2001: 47–70), there are three broad classes
of institutional structures. Regulative struc-
tures are generally formal and explicit,
legally sanctioned, and indicated by rules and
laws, often enforced by the state. Normative
structures are based on the value or moral
expectations associated with roles and, in
the contemporary world, are generally
associated with processes of professional
accreditation and certification. Finally,
cultural-cognitive structures are based on the
shared understandings of actors, which are
generally taken-for-granted and legitimated
by the larger cultural and institutional milieu
(e.g., what a ‘good’ person should do in a sit-
uation, or what a ‘just’ solution is in a dis-
pute). Specific institutional structures, such
as ‘conceptions of control,’ ‘myths,’ ‘logics,’
742 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and ‘recipes’ occupy an ambiguous relation-
ship with respect to these three categories,
seemingly spanning two or all three cate-
gories. For example, a particular conception
of justice can find expression in cultural
forms and be codified in law.
There is a considerable amount of research
that measures the regulative dimension
of institutional structures. For example,
research on the proliferation of the finance
conception of control examined the spread of
the multidivisional form (Fligstein 1990).
There is also much work that taps the norma-
tive dimension of institutional structures. For
example, research on the evolution of the
normative framework that underpins the
modern market for corporate control exam-
ined changes in the language used in the
business press to describe hostile takeovers
and their principal players (Hirsch 1986).
There is even research that attempts to map
both the regulative and normative dimen-
sions of institutional structures. For example,
research on the proliferation of the share-
holder model of governance in Germany
examined the use of language that privileged
stock holder interests in corporate annual
reports and tracked the adoption of
governance structures and accounting sys-
tems that reflect those interests (Fiss and
Zajac 2004). But work that explores the
cognitive expression of institutions is just
beginning. One interesting study in this vein
examines the emergence of the cognitive
construct ‘nanotechnology’ that accompa-
nied the emergence of the industry that we
now know by this name (Grodal 2006; also
see George, Chattopadhyay, Sitkin, and
Barden 2006).
Another fundamental NI structural con-
cept is the ‘field,’ which corresponds to the
domain within which a particular institution
operates. It consists of a group of organiza-
tions that interact with one another and that
are subject to the same regulative, normative,
and cognitive institutional constraints. Fields
differ from ‘populations’ and ‘industries,’
which are composed of organizations that are
similar to each other (importantly, with
respect to their relations to other organiza-
tions). Fields are also different from
‘networks,’ which are composed of organiza-
tions that are not necessarily subject to the
same institutional constraints. Early propo-
nents of the new institutionalism distin-
guished between two types of fields:
‘technical’ and ‘institutional’ (Scott and
Meyer [1983]/1991). While in technical
environments rewards are accrued by organ-
izations for ‘effective and efficient control
of their production systems,’ institutional
environments require that organizations
conform to rules and regulations ‘to receive
support and legitimacy’ ([1983]/1991: 123).
However, as we note below, it is noteworthy
of the new institutionalism’s expanding com-
prehensiveness that, later on, this distinction
was put into question.
Many proponents of the NI consider the
field to be a unique and crucial concept of
this approach. DiMaggio has argued that ‘the
organization field has emerged as a critical
unit bridging the organizational and the
societal levels in the study of social and com-
munity change’ (quoted in Scott 2001: 148).
Davis and Marquis (2005a) contend that it is
the level of analysis most likely to give rise to
improved understanding of modern organiza-
tions. Thus it is ironic that fields are seldom
characterized precisely. To the best of our
knowledge, most NI studies do not go to
great lengths to establish the boundaries of
the fields they study. More often than not,
fields are defined as coterminous with more
traditional aggregates such as industries
(cf. Thornton and Ocasio 1999) or groups of
organizations listed in standard annuals such
as the Fortune 500 (Fligstein 1990).
Attributes The most fundamental NI attribute
is ‘legitimacy,’ which corresponds to the
extent to which a structure or practice resem-
bles an institution. The more legitimate a
structure or practice is considered by actors
in general and powerful actors more specifi-
cally, the more reasonably the structure or
practice can be called an institution. The
extent to which structures and or practices
are considered legitimate have been for the
 IS THE NEW INSTITUTIONALISM A THEORY?
most part only measured indirectly by the
extent to which the structure or practice is
prevalent in a field (cf. Fligstein 1990) or by
measuring the extent to which organizations
that adopt the structure or practice receive
resources from powerful actors (Baum and
Oliver 1991, 1992). However, a few scholars
have attempted to measure legitimacy more
directly, by assaying explicit endorsements
of organizations that conform to institutional
expectations by key gatekeepers such as
regulators and media representatives
(Deephouse 1996).
Processes The most fundamental NI process
is ‘institutionalization,’ which roughly corre-
sponds to the mechanisms through which a
way of organizing becomes accepted as
appropriate by numerous and/or powerful
actors. DiMaggio and Powell ([1983]/1991)
have formulated a series of concepts that
describe the way institutionalized elements
proliferate (coercive, normative and mimetic
isomorphism). Following Berger and
Luckman (1966), Tolbert and Zucker
([1996]/1999) identify three processes
involved in institutionalization. The first
process, ‘habitualization,’ results in the
formalization of new structural arrange-
ments. ‘Objectification’ refers to the devel-
opment of a social consensus with regard to
the value of these new arrangements. And,
finally, ‘sedimentation’ (or full institutional-
ization) ‘is characterized both by the
virtually complete spread of structures across
the group of actors theorized as appropriate
adopters, and by the perpetuation of
structures over a lengthy period of time’
([1996]/1999: 178). The related concepts
of ‘institutional reproduction’ and
‘de-institutionalization’ signify mechanisms
through which institutions are maintained
and undermined. Oliver (1992) has elabo-
rated a series of conditions that she contends
undermine institutional regimes. Jepperson
(1991: 152) also recognizes the process of
‘reinstitutionalization,’ which is illustrated
by the ‘exit from one institutionalization, and
entry into another institutional form, organ-
ized around different principles.’
743
A variety of historical and quantita-
tive empirical studies have examined
how strategies and practices become institu-
tionalized. For example, researchers have
shown that actors, both collective and individ-
ual (Battilana 2006; Garud, Jain, and
Kumaraswamy 2002; Greenwood, Suddaby,
and Hinings 2002; Macguire, Hardy, and
Lawrence 2004), can play the role of ‘institu-
tional entrepreneur’ (DiMaggio 1991;
Fligstein 1997; Greenwood and Suddaby
2006; Leca and Naccache 2006) advocating
and disseminating a particular structure.
Business schools, for example, have taught
organizational practices as ‘appropriate’ or
‘modern’ and encouraged their adoption.
Individuals have championed structural inno-
vations and sometimes have been successful
(Selznick 1957; Hirsch, 1975; Garud and
Kumaraswamy 1995). Actors, however, differ
in their capacity to bestow legitimacy on a
way of organizing. High status actors, in par-
ticular those who enjoy high performance and
maintain affiliations with other high status
actors (such as top business schools) and
powerful actors who occupy positions in
formal hierarchies (such as government offi-
cials) or who possess valuable and scarce
resources (such as Chief Financial Officers),
play particularly important roles in institu-
tionalizing ways of organizing (Rao, Greve,
and Davis 2001). More recently, social move-
ment theorists have also used these ideas to
understand the success and failure of those
seeking to promote or undermine institutions
(Davis, McAdam, Scott, and Zald 2005).
Relationships
The new institutionalism is characterized by
two types of relationships: tendencies and
causal relations.
Tendencies Proponents of the NI recognize
two kinds of tendencies. The first type of ten-
dency refers to developments that tend to
unfold over time. For example, proponents of
the new institutionalism postulate that organ-
izations tend, over time, to become more
similar to one another. That is, they tend to
become ‘isomorphic’ even when these
744 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
changes do not increase organizational effi-
ciency. DiMaggio and Powell ([1983]/1991)
have identified three types of isomorphic
pressures. Coercive isomorphism ‘results
from both formal and informal pressures
exerted on organizations by other organiza-
tions upon which they are dependent and by
cultural expectations in the society within
which organizations function’ ([1983]/1991:
67). Regulative structures may demand,
through the force of law for example, that
organizations adopt affirmative action prac-
tices. Very different organizations will thus
have similar sorts of human resources units
and practices in response to this outside reg-
ulatory pressure (Sutton, Dobbin, Meyer, and
Scott 1994). While changes in organizations
resulting from coercive isomorphism gener-
ally arise from controls placed on organiza-
tions by the state, ‘normative isomorphism’
typically arises from professionalization,
similarities in formal education and profes-
sional networks, which results in the stan-
dardization of organizational responses.
Accounting firms and hospitals in different
market settings, and with different special-
izations, may end up looking much like
other accounting firms and hospitals because
that is what is sanctioned by their profes-
sional certification bodies (Abbott 1983;
Greenwood et al. 2002; Gendron, Suddaby,
and Lam 2006; Scott, Ruef, Mendel, and
Caronna 2000). Finally, ‘mimetic isomor-
phism’ occurs when organizations face
environmental uncertainty and so mimic one
another, conferring on one another a degree
of legitimacy, as a solution to this condition.
Copying the structure and practices
of other organizations allows organizations
to be mutually understood, as well as under-
stood by outsiders when there is cognitive
uncertainty. Adopting the symbols, language,
structures and practices of other organiza-
tions allows new or transforming organiza-
tions to identify themselves institutionally
as a college textbook publisher (Levitt and
Nass 1989), museum (DiMaggio 1991)
or school (Meyer and Rowan 1978;
Meyer 1977).
New organizational forms developing out-
side of institutionalized norms, for example
for-profit higher educational systems, must
orient themselves in regard to accepted forms
and practices. All three processes are impor-
tant for understanding how institutionalized
components proliferate. A large number of
empirical studies have charted the emergence
of institutions over time (see citations in the
section immediately above). However, these
studies have disproportionately focused upon
mimetic processes as the mechanism driving
isomorphism (Mizruchi and Fein 1999).
Furthermore, while one could imagine the
degree of isomorphism to vary across organi-
zational fields, proponents of the new institu-
tionalism have not identified variables that
regulate the extent to which these tendencies
are exhibited.
The second type of tendency designates
characteristics that are time invariant. For
example, the NI postulates that when institu-
tional elements are incorporated into an
organization, they tend to be ‘loosely cou-
pled’ with the organization’s technical core
(Meyer and Rowan [1977]/1991; for a cri-
tique see Tyler 1987). While one could imag-
ine the degree of loose coupling between
institutional and technical elements to vary
as a function of other conditions, proponents
of the new institutionalism have rarely exam-
ined this potential problematic (cf., however,
Orton and Weick 1990). Early studies on
loose coupling focused on the not-for-profit
sector, looking at, for example, education
organizations (Meyer 1977; Meyer and
Rowan 1978; Weick 1976; for criticism see
Lutz 1982) and the criminal justice system
(Hagan, Hewitt, and Alwin 1979).
Subsequently, the new institutionalism began
to look at the for-profit sector. Some
researchers have examined what might be
considered the ceremonial adoption of legiti-
mate practices, such as the employment of
new accounting standards (Mezias 1990) or
stock buy-back programs (Westphal and
Zajac 2001). Others, though, have examined
the adoption of substantively significant
structures and practices in the for-profit
 IS THE NEW INSTITUTIONALISM A THEORY?
sector, such as the adoption of the multidivi-
sional form and diversifying acquisitions
(Fligstein 1985, 1987; Fligstein and Dauber
1989; Fligstein and Freeland 1992; Palmer,
Barber, Zhou, and Soysal 1995). For a while,
the concept of loose-coupling appeared to
dwindle in importance. In the process, the
concept looked like it would be transformed
from a largely explanatory framework to a
more strategic one, which offers managers
practical insights for managing their environ-
ments, as evinced in research on the relation-
ship between entrepreneurial firm linkages
and IPO success (Stuart, Hoang, and Hybels
1999). However, there has recently been an
outpouring of studies that have examined
loose-coupling as an explanatory concept in
the for-profit sector (e.g., Brandes, Hadani,
and Goranova 2006; Christmann and Taylor
2006; Fernandez-Alles, Cuevas-Rodriguez,
and Valle-Cabera 2006; Fiss and Zajac 2006;
Stevens, Steensma, Harrison, and Cochran
2005), indicating that the concept will con-
tinue to play more than just a strategic role.
Causal relationships The new institutional-
ism’s most fundamental causal relationship
is that between institutionalization, legiti-
macy, and beneficial organizational out-
comes (birth, the acquisition of resources,
high performance, and survival). The rela-
tionship between institutionalization and
legitimacy is often treated as definitional (see
Suchman 1995 for a critical discussion).
Indicative of this, the many grammatical
forms of institution (institutional, institution-
alized, institutionalization) are used inter-
changeably with the various forms of
legitimacy (legitimate, legitimized, legiti-
mating, etc.). However, one study of
commercial banks demonstrated that the
adoption of institutionalized practices
(the adoption of asset strategies prevalent in
the industry) leads to increased legitimacy
(Deephouse 1996). The predicted relation-
ship between being institutionalized and
legitimate on the one hand and enjoying ben-
eficial organizational outcomes on the other,
though, has been examined in considerable
depth. And a substantial body of research
745
testifies to the fact that the more institution-
alized and thus legitimate an organizational
structure or process is, the more beneficial
outcomes organizations enjoy by embracing
them (see, for example, Baum and Oliver
1991; Baum and Oliver 1992; Human and
Provan 2000; Ruef and Scott 1998; Singh,
Tucker, and House 1986; Zucker 1987).
Another important causal relationship
pertains to the moderating effects of uncer-
tainty on the relationship between
institutional conformity, legitimacy, and
organizational outcomes. Proponents of the
new institutionalism believe that the more
uncertainty there is about the efficiency char-
acteristics of alternative forms of organizing,
the less impact those efficiency characteris-
tics will have on the choice of organizing
form and the more impact that institutional
forces will have on this choice (Powell and
DiMaggio [1983]/1991). This postulated
relationship is arguably one of the new insti-
tutionalism’s most novel aspects, one which
sets it apart from economic and functionalist
sociological explanations of organizational
behavior. It suggests that the adoption of
institutionalized elements can benefit organi-
zations, even if it does not increase the effi-
ciency and/or effectiveness of (indeed, even
if they inhibit the efficiency of) the genera-
tion of products and services, because the
efficiency and/or effectiveness characteris-
tics of alternative modes of organizing are
often unknown (and partly because institu-
tional elements tend to be loosely coupled
with an organization’s technical core).
A number of studies presented evidence sug-
gestive of the moderating impact of uncer-
tainty (cf. Haunschild and Miner 1997).
Assessment
This discussion suggests that the new institu-
tionalism has come a long way with respect
to the articulation of measurable concepts
(pertaining to structures, attributes, and
processes) and the elaboration of empirically
verifiable postulated relationships. This con-
clusion is echoed by Scott (forthcoming) in
his stocktaking of the new institutionalism.
746 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
He argues that the new institutionalism has
moved ‘from looser to tighter conceptualiza-
tions.’ And he argues that the new institution-
alism has moved from elaborating simple to
more complicated relationships; specifically,
‘from determinant to interactive arguments.’
And he contends that this has happened
partly by moving ‘from assertions to evi-
dence.’ While we identify specific gaps in
conceptual development and empirical vali-
dation, we suspect that progress towards fill-
ing these gaps will be made in the coming
decades.
Still, we think that at least one question
can be raised about this dimension of the new
institutionalism’s development as a theory.
More than a few of the concepts and relation-
ships that the new institutionalism posits are
borrowed from other theories. Indeed, the
concept of ‘legitimacy’ is central to many
other theories, going as far back as Max
Weber’s ideas on systems of imperative coor-
dination (1968: vol. 1) and Parsons’s elabora-
tion of what substantively became known as
structural functionalism (e.g., 1951: 348–59,
1956a, 1956b, 1961), and as recently as
modern management theories such as Pfeffer
and Salanciks’s ([1978]/2003) resource
dependence perspective. Similarly, the con-
cept of ‘uncertainty’ is central to decision
theory (March and Simon [1953]/1993;
Cohen, March, and Olsen 1972), contin-
gency theory (Thompson [1967]/2006;
Lawrence and Lorsch 1967), and (again) the
resource dependence perspective. The new
institutionalism also borrows postulated rela-
tionships from other theories. For example, it
is difficult to distinguish between coercive
institutional pressures and resource depend-
ence-based power. Similarly, it is difficult to
distinguish mimetic isomorphism from inter-
organizational learning and other diffusion
processes. The argument that uncertainty
increases the salience of institutional
processes parallels arguments that uncer-
tainty enhances the salience of status and
social comparison processes. Finally, there
have been attempts to borrow other concepts,
such as ‘power’ from other theories (for a
discussion of power in organization studies
see Hardy and Clegg [1996/1999]). This
raises the question of the extent to which the
new institutionalism in some cases represents
a new bottle for old wine.
General theory: organizational
type, time, and space
Litchfield and Thompson complained that
organization theory in their time was frag-
mented into separate theories for different
kinds of organizations: military organiza-
tions, educational organizations, governmen-
tal organizations, and business organizations.
They advocated the development of general
theory, by which they meant theory that was
applicable to multiple types of organizations
and presumably in multiple times and places.
The new institutionalism began as a
behavior- and context-specific theory. It was
developed to explain the ceremonial adop-
tion of structures and practices by organiza-
tions situated in non-market environments,
contexts in which such inefficient structures
and practices could survive. Thus it
explained why public schools adopted educa-
tional reforms in which teachers were
required to develop elaborate lesson plans, an
organizational practice that was both rational
and legitimate, but these lesson plans bore
little relation to what teachers actually did in
their classrooms (Meyer 1977; Meyer and
Rowan 1978). Proponents of the new institu-
tionalism at this time surrendered analysis of
non-ceremonial forms in market contexts to
economists. Over the years, proponents of
the new institutionalism have continued to
examine adoption of organizational elements
that are not tied to an organization’s technical
core (e.g., charitable giving) in non-market
contexts (e.g., the corporate philanthropy
field). However, it has also become increas-
ingly more general in several ways.
Perhaps most important, the NI has
increasingly been employed to analyze
the adoption of more pragmatic structures
and practices by for-profit organizations.
 IS THE NEW INSTITUTIONALISM A THEORY?
The new institutionalism expanded its scope
by developing arguments that characterized
markets as fundamentally (albeit, variably)
uncertain and by characterizing legitimacy as
an attribute that can increase a firm’s access
to valued resources and thus improve its per-
formance, in the process transforming the
concept of efficiency (cf. Fligstein 1990).
Two important theoretical pieces summarize
the generality of the new institutionalism in
this respect. In his stock taking of the then
adolescent neo-institutional approach, Scott
(1987) jettisoned the distinction between
technical (market) contexts and institutional
ones and embraced a perspective that viewed
market and non-market contexts simply as
different institutional spheres. More recently,
Biggart and Delbridge (2004) developed a
classification scheme of different kinds of
market institutions. In their typology markets
are not a single institutional type. Rather
markets have four qualitatively different
institutional expressions, depending on
whether they emerge in social environments
where instrumental or value-based substan-
tive rationality dominates decision making
and where social action is particularistic or
universalistic (oriented towards individual
characteristics or supra-individual princi-
ples). Social environments vary along the
instrumental-substantive rationality dimen-
sion and the universalistic-particularistic
dimension and result in four logically differ-
ent institutional settings: price, communal,
moral, and associative economic orders with
very different hypothesized structures and
dynamics. Rather than seeing the market as
one historically developed institutional form
for organizing exchange, Biggart and
Delbridge argue that economic exchange
relations can be institutionalized in quite
different ways. This classification system
opens up the possibility of economic theory
testing, and also for seeking other forms of
institutional types, for example of health care
systems or educational structures.
Ruef and Scott’s (1998; Scott et al. 2000)
empirical analysis of health care systems
further expanded the generality of the new
747
institutionalism by explicitly taking into
account the temporal dimension. They exam-
ined how the institutional context in the
health care sector evolved over time, making
different kinds of governance arrangements
more or less advantageous. Similarly,
Thornton and Ocasio (1999) demonstrated
how the institutional context in the publish-
ing industry changed over time from a family
logic to a market logic, altering the condi-
tions that made corporate acquisitions desir-
able. And Dobbin (1997, 2000) documented
how the institutional context in the US
railroad industry changed as the result of
alterations in anti-trust policy, shifting the
conditions that made railroad foundings and
acquisitions in that industry more or less
likely.
Finally, there is now a growing body of
research that expands the generality of the
new institutionalism along the spatial dimen-
sion. This work examines different national
contexts, which can vary with respect to the
types of sectors that dominate society (state,
market, and mixed) and with respect to the
characteristics of those sectors (types of mar-
kets). Works by Orrù, Biggart, and Hamilton
(1997) and Biggart and Guillén (1999)
demonstrate how variation in the institutional
context of Asian economies has generated
different market structures and performance.
Guillén and his associates (Guillén 2000;
Guler, Guillén, and Macpherson 2002) have
shown how variation in the institutional con-
text of developing economies has generated
differential rates of adoption of work process
reform and hostile takeovers.
Assessment
We think that the new institutionalism is now
a truly general framework, in that it can be
used to explain both ceremonial and substan-
tive behavior in complex organizations of all
types (i.e., in both non-market and market
environments, and in different types of
market environments) in virtually all times
and places. This is an impressive achieve-
ment. With this said, we discern a tension
between the forces seeking to make the new
748 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
institutionalism more general (identified
above) and those seeking to preserve its sen-
sitivity to context.
A major appeal of the NI is its rejection of
the often abstract character of much organi-
zation theory (Davis and Marquis 2005a).
Early organization theorists aspired to char-
acterizing organizations according to con-
structs such as technology, size, and
centralization, irrespective of environmental
context. A subsequent wave of organization
theorists aspired to characterize organiza-
tions according to their environments, but
they characterized organization environ-
ments in categories such as ‘munificence’
and ‘dynamism’ that ignored more fine-
grained dimensions of context. Many modern
organization theorists have continued this
tendency (Hannan and Freeman 1977; Burt
1980). The proponents of the NI have taken
into account the context in which organiza-
tions are situated to a much greater extent
than the advocates of other theoretical
approaches; considering not just the material
relationships in which organizations are
embedded but the normative and cognitive
environment as well. But characterization of
an organization’s normative and cognitive
environment requires non-positivist modes
of analysis, such as historical and interpreta-
tive methods, which Ventresca and Mohr call
the ‘new archival project’ (2002). Such
modes of analysis tend to produce conclu-
sions that are highly industrially, historically,
and spatially specific. Exemplary studies in
this vein include Mohr and Duquenne
(1997), DiMaggio and Mullen (2000),
Spicer, McDermott, and Kogut (2000) and
Kogut and Spicer (2002). Thus, the more
context-specific NI’s analyses are, the less
generalizable its insights tend to be.
Comprehensive theory: disciplines,
levels, and substantive areas
Litchfield and Thompson argued that organi-
zation theory should aspire to comprehen-
siveness. By this they meant three things.
First, Litchfield and Thompson argued that
organization theory should draw on the full
range of social science disciplines. This argu-
ment laid the foundation for the two addi-
tional contentions. Second, they thought that
organization theory should operate at three
levels of analysis – the individual, the
organization, and the environment. Third,
they thought organization theory should
apprehend the many dimensions of the
administrative process – decision making,
implementation, and learning.
Disciplines
Proponents of the new institutionalism, like
the proponents of many other theoretical per-
spectives in organization studies, have drawn
heavily on sociological theory. Scott (2005)
recently located the roots of new institution-
alism in the works of classic social theorists
Marx, Durkheim, and Weber. The notion that
organizations operate on an institutional level
has its modern origins in Selznick’s (1948,
1949) path-breaking study of the Tennessee
Valley Authority, which showed how the
authority’s environment influenced the goals
it pursued, shifting them from a progressive
to a more conservative agenda. Parsons’s
(1956a, 1956b) explicitly theorized the insti-
tutional level of analysis in his early outline
of a theory of organizations. Stinchcombe
(1965) exploited this basic model when he
detailed how organizations are constructed of
elements in their surrounding social structure
and that this imprinting is resistant to change.
The new institutionalism also has roots in
the work of Berger and Luckmann’s The
Social Construction of Reality (1966),
which, put crudely, advanced the notion that
there is no reality beyond what we manufac-
ture and agree upon together. This notion had
wide-ranging effects in social thought, but
only in macro-units of analyses among new
institutionalism scholars. The notion of insti-
tutions as inter-subjectively meaningful
social constructions permeated NI studies
at the levels of the organization, field,
and global systems, but few NI scholars
have elaborated the implications of this view
 IS THE NEW INSTITUTIONALISM A THEORY?
at a micro-level. Institutions are by definition
constructs that are only visible when enacted
by individuals in social settings, including
organizations. However, those interested in
micro-processes in organizations such as
decision-making and identification processes
(Elsbach and Kramer 1996) have largely
approached these dynamics from the per-
spective of individual psychology.
In what ways can we think of individuals
enacting institutions? Biggart and Beamish
(2003: 257) argue that conventionalized
activities, for example routine ways of
making and justifying decisions, are actually
‘institutions writ small.’ Conventions are
taken-for-granted and socially efficient ways
of enabling actors to coordinate with and
evaluate each others’ actions, not only in the
moment, but over time as a socially legiti-
mate pattern. According to Palmer and
Biggart (2002), because organized ‘action is
collective, situations must be interpreted
iteratively in mutually intelligible ways,
therefore developing and utilizing institu-
tionalized conventions’ may be a solution to
individuals’ uncertainty in ambiguous set-
tings. Institutionalized organizations are in
fact bundles of conventions about decision-
making rules and other organizational
routines that have congealed into structural
forms.
Social construction as both a concept and
as a process for study has had far more devel-
opment in other areas of the social sciences,
including anthropology and communica-
tions. The analysis of micro-social processes
has traditionally been the purview of tradi-
tions rising out of pragmatism, particularly
symbolic interactionism, but also the French
conventions school (also known as the new
economics of conventions), and in the
Science and Technology Studies tradition of
the dynamics of scientific discovery and
practice (Latour and Woolgar [1979]/1986;
Latour 1987; Pickering 1992). These related
perspectives have found their way into orga-
nizational studies recently through the analy-
sis of technological artifacts in organized
settings, artifacts that become imbued with
749
collective meanings that allow social
processes to develop, stabilize, institutional-
ize, and change in organized settings, for
example Barley’s (1986) study of the intro-
duction of CT scanners into radiology
departments demonstrated the disruption of
established interactional and authority
patterns. New machines demanded new prac-
tices and created opportunities for subordi-
nates to become experts and reverse roles
with superiors. With time, new practices and
roles were institutionalized. Similarly,
Bechky (2003) examined how occupational
categories and boundaries are negotiated
through material technologies. She found
that engineering prototypes and technical
drawings used by a semiconductor firm were
imbued with meanings. Artifacts symbolized
and structured relations between groups of
assemblers, technicians, and engineers.
Although they do not claim to be part of
the new institutionalism, there are logical and
theoretical links between these scholars and
institutional theory. When meanings crystal-
lize in objects and communities of practice
such as radiologists and hardware designers
they are in the process of becoming institu-
tionalized (Biggart and Beamish 2003). To
the extent that the new institutionalism wants
to claim to be a comprehensive theory that
can operate at all units of analysis, it must
develop a micro-logical orientation that
shows the emergence of meaning, its devel-
opment into inter-subjectively agreed-upon
classifications, definitions, and values, and
the development of structures that emerge
from these understandings. Psychology
and economics, by themselves, predicated as
they are on methodological individualism,
cannot conceptualize the shared and taken-
for-granted meanings that are central to new
institutionalism.
One can imagine five lines along which a
micro-NI might develop. First, a micro-NI
could look at traditionally psychological
areas of investigation such as employee
selection, work design, training and leader-
ship to examine how differently institutional-
ized firms develop conventional solutions
750 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
around these issues. Second, it could theorize
the role of individuals as institutional entre-
preneurs to develop a truly institutional
theory of leadership (cf. Biggart and
Hamilton 1987; DiMaggio 1991; Hargadon
and Douglas 2001). Third, a micro-NI could
examine the cultural-cognitive components
involved when decision makers attempt to
‘read’ the institutional environment for
strategic opportunities and threats (George
et al. 2006). This line of research, while
rooted in the psychology of decision making,
opens the door to incorporating interpretive
processes that decode social meanings.
Fourth, it could pursue a comparative analy-
sis of conventions in different institutional-
ized fields that might suggest ways in which
organizational actors find solutions to prob-
lems of organizing, for example, how archi-
tects in state-directed building programs
construct building plans in comparison to
those in industrialized arenas of the same era
(Guillén 2006). Finally, a micro-NI could
develop a more active understanding of
institutionalization processes (cf. Zucker
[1977]/1991). At present institutional theory
is relatively static, assuming the processes
from which structures emerge (see Barley
and Tolbert 1997 for a discussion of this
problem). An interactive NI offers the prom-
ise of seeing how institutions emerge out of
negotiation, conflict, and collaboration.
There is also work in economics upon
which new institutionalists might draw.
Institutional thinking in economics dates
back to the work of Veblen, Commons,
Mitchell and Coase, who looked at the indi-
vidual to see how socialization and organiza-
tional arrangements shape the choices he or
she makes (see Hodgson 1998 and
Rutherford 2001 for more on institutional
economics). These new economists differed
from neoclassical economists in not assum-
ing that actors have fixed preferences, but
argued that their preferences may be socially
formed and influenced by the context in
which they find themselves – for example in
a newly emerging middle class (Veblen
[1899]/1979). This strain was developed by
Coase (1937) and extended and codified by
Williamson (1975, 1981). The central idea in
this line of inquiry is that economic transac-
tions (not producers [the source of supply] or
consumers [the source of demand]) are the
fundamental unit of analysis in economics.
The institutional structures through which
transactions are governed are the fundamen-
tal variables. Put bluntly, institutional struc-
tures persist to the extent to which they are
efficient means of governing transactions
under particular conditions (which pertain to
uncertainty, asset specificity, etc.). Nelson
and Winter (1982) have developed a more
nuanced brand of institutional economics
which emphasizes the path-dependent
process through which institutional change
occurs, a path in which new forms emerge
from existing ones.
This work adds an important caveat to ear-
lier institutional economics: while institu-
tional structures persist to the extent to which
they are efficient, a structure’s efficiency
characteristics are only evaluated with
respect to concrete alternative structures in
the market at the time. Thus, persisting insti-
tutional structures are not optimally efficient,
but only relatively so. As such, it brings eco-
nomic institutionalism in closer correspon-
dence with sociological institutionalism.
Perhaps the best example of this line of work
is the simultaneously historical and game
theoretic comparative analyses of economist
Avner Greif (1994). Greif examined two
premodern trading societies with different
institutional structures, the 11th-century
Maghribi traders living in a Muslim world
and the 12th century Genoese traders which
were part of the Latin world. The Maghribi
society was a collectivist one, with informa-
tion shared and punishments collectively
enforced, and the Genoese society was
decidedly individualist. Both faced the
danger of embezzlement when using over-
seas agents but resolved this principal–agent
problem with different institutional means
and each society created practices and sanc-
tions consonant with their cultures. Greif
goes on to argue that differently efficient
 IS THE NEW INSTITUTIONALISM A THEORY?
solutions cannot be changed because of the
effects of path dependence. The work of
Milgrom and Roberts (1992) also approaches
issues of interest to the NI. They ask why
organizational forms take the shapes that
they do. This is a fundamental theory of the
firm question posed by Coase (1937) and
Williamson (1975) but like Greif they find
the answer in the structure of social relation-
ships between firms, not assuming that all
contracts are arms-length but may be
alliances or relational contracts.
The new institutionalism in organization
studies, though, has not much benefited from
the resurgence of institutional thinking in
economics. Economic institutionalism regis-
tered an impact within organization studies
soon after it experienced its resurgence in
economics (cf. Walker and Weber 1984). And
it has had a substantial impact in the strategy
area in recent years (cf. Mayer and Salomon
2006). However, economic institutionalism
is typically presented as a stand-alone
approach, rather than as a component of the
new institutionalism as we have character-
ized it here. We suspect that this is because
the long-standing antagonism between eco-
nomics and sociology (the primary founda-
tion of NI) has spilled over into the field of
organization studies. Indeed, many lament
the growing influence of economic thinking
in organization science (Pfeffer 1993, 1995;
Hirsch, Michaels, and Friedman 1987;
Hirsch, Friedman, and Koza 1990). However,
as economists ‘relax’ assumptions of individ-
ual omniscience and rationality, some bor-
rowing from NI is likely as well.
Proponents of the new institutionalism
have also drawn on work in political science.
The earliest political scientists focused pri-
marily on the institutional structure of politi-
cal life; in particular, the structure of
governing bodies of the state, political par-
ties, and trade unions. This institutional focus
was rejected by what might be called modern
political science, which to a large extent
focuses on voter behavior and which recently
has drawn on micro-economics in the form
of rational choice theory. Recently, though,
751
institutional thinking is enjoying something
of a renaissance in political science, in part as
a critique of the methodological individual-
ism of rational choice. Robert Lieberman’s
(2002) reconciliation of ideational and insti-
tutional approaches with economically
inspired ones was one of the ten most down-
loaded articles in political science between
2002 and 2004 (APSA 2005: 13). New col-
lections of work are appearing that compete
with rational choice approaches (Lecours
2005; Mahoney and Rueschemeyer 2003).
Institutional analysis in political science
never disappeared from European thought
where historical and ideational approaches
have always been important. Many of these
political science analyses are using new insti-
tutionalism to account for the possibilities
and difficulties for institutional change in
settings such as post-colonial multicultural
Canada and the formation of the European
Union.
The NI approach in organization studies
has benefited from the resurgence of institu-
tional thinking in political science. Indeed,
one might say that the regulative pillar of
institutional theory is to a large extent built
upon the theoretical foundation of the institu-
tional wing of political science. Certainly the
work of several new institutionalists is heav-
ily influenced by institutional thinking in
political science (cf. Campbell 1998;
Clemens 1993). And some new institutional-
ist scholars have done more than simply
borrow from institutional scholarship in
political science; they have developed ideas
that suggest the limitations of that scholar-
ship. Perhaps most important, Edelman
(1992) has shown how regulative structures
can be considered endogenous products of
institutional development in the area of equal
opportunity legislation and policy. With this
said, the new institutionalism’s incorporation
of institutional thinking in political science is
far from complete. This is perhaps most evi-
dent in the failure of the new institutionalism
to develop a unique understanding of power,
despite the repeated exhortations of leading
figures in the field to do so (DiMaggio and
752 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Powell 1991: 30–1; Hirsch 1997; Perrow
1985). We think that new institutionalists
might make headway in addressing this
deficiency by drawing on radical analyses
of power within political science and
political sociology that characterize it as a
multifaceted phenomenon that includes sym-
bolic and cognitive elements (cf. Gaventa
1982; Lukes 2005).
Levels of analysis
Proponents of the new institutionalism have
clearly focused primarily on the environmen-
tal level of analysis, viewing the environment
as the source of rationalized myths that could
be used as building blocks by new organiza-
tions or as material for change by existing
ones. Soon thereafter, proponents of the new
institutionalism advanced a new level of
analysis within the broader environment, the
‘field’ (DiMaggio and Powell [1983]/1991).
As indicated above, fields group organiza-
tions according to their tendency to establish
relationships with one another and according
to their regulation by a common set of insti-
tutional constraints. New institutionalists
also recognize another level of analysis sim-
ilar to the organizational field but operating
at a higher level of aggregation: the societal
sector. Scott and Meyer ([1983]/1991: 117)
define the societal sector as: ‘(1) a collection
of organizations operating in the same
domain, as identified by the similarity
of their services, products or functions,
(2) together with those organizations that
critically influence the performance of the
focal organizations ... The adjective societal
emphasizes that organizational sectors in
modern societies are likely to stretch from
local to national or even international actors.’
The concepts of field and societal sector
emerged out of role-set theories in sociology
where individuals are seen in terms of the
roles and relationships they have with each
other, not just as a collection of individuals.
Organization fields and sectors are similarly
communities of interconnected firms or other
forms of organization such as suppliers or
regulatory agencies.
Subsequently, however, some proponents
of the new institutionalism began to theorize
an even higher level of analysis: the global or
world system. These theorists, most notably
John W. Meyer and his associates (Boli,
Ramirez, and Meyer 1985; Meyer and
Jepperson 2000; Ramirez and Boli 1982;
Ramirez and Meyer 1980) contend that insti-
tutionalized forms and practices may develop
and disseminate above the field, sector, and
nation-state levels. Ideas, imageries, and
functions may emerge in one setting but
migrate globally, being incorporated in regu-
lative, normative, and cognitive systems
operating at the world system level. For
example the notion of what constitutes
progress may be encapsulated in measures
such as the Gross National Product (GNP)
which diffuses through the world polity,
which is composed of international bodies
such as the World Bank, the United Nations,
and the International Monetary Fund. This
results in common measurements and poli-
cies in very different settings. Ideas such as
financial transparency and practices such as
accounting rules, initially alien in non-
Western societies, are carried across national
boundaries by consulting firms and Western
educational institutions that attract interna-
tional students who eventually return home
with new constructs. Ideas, concepts, and
practices are thus rationalized as ‘normal’
and become embedded in organizations
globally (cf. Drori, Jang, and Meyer 2006).
Proponents of the new institutionalism,
though, have also pursued lower levels of
analysis. The earliest proponents of the new
institutionalism implicitly theorized dynam-
ics within organizations when they con-
tended that the institutional elements drawn
from the environment were not tightly cou-
pled with the organization’s technical core.
Subsequently, Fligstein (1996) developed
what he referred to as a ‘political/cultural’
theory of the firm, which considers the
interplay between regulative, normative, and
cognitive structures within the organization.
He contended that different coalitions of
managers that embrace dissimilar norms and
 IS THE NEW INSTITUTIONALISM A THEORY?
cognitive models, which are derived from the
environment, vie for power within the firm.
The coalitions that rise to power adopt struc-
tures and pursue strategies and tactics that
are consistent with their cognitive models.
Fligstein argued that executives with finance
backgrounds rose to power in the 1960s and
1970s, replacing marketing and production
executives. Finance executives embraced the
finance conception of control, which under-
stood the firm to be a portfolio of invest-
ments. The finance conception of control had
its origins in agency theory, which was dis-
seminated by the major US business schools.
It was consistent with the adoption of the
multidivisional form and the pursuit of
diversification via mergers and acquisitions,
a policy that was also consistent with recent
developments in anti-trust law and federal
government policy. Others have also devel-
oped new institutional arguments at the level
of the organization, such as Ocasio’s (1999)
analysis of the institutionalization of norms
and rules regulating executive succession in
large corporations.
More recently, some proponents of the
new institutionalism have migrated to the
individual level of analysis. For example,
Zbaracki (1998) has examined managers’
adoption of Total Quality Management
(TQM), analyzing how managers conceptu-
alize and in the process transform this inno-
vation as they adopt it. Elsbach (1994) has
looked at how the cattle industry responded
to a health crisis, examining how managers
employ legitimated logics to protect them-
selves from potentially damaging criticisms.
In both articles, managers are drawing on
institutional elements in the environment to
conceptualize and solve managerial prob-
lems. Finally, George et al. (2006) have
attempted to develop the cultural-cognitive
pillar of the new institutionalism by engaging
with behavioral theories of decision making.
Substantive areas
The earliest new institutionalist analyses
were geared towards debunking rational and
functionalist accounts of organizational
753
change. These analyses portrayed change
justified on rationalist or functionalist
grounds as primarily symbolic in character,
geared not to alter the way organizations
conducted their business but rather towards
winning approval from important con-
stituents of their environments (Meyer and
Rowan [1977]/1991). Some recent new insti-
tutionalist analyses continue this debunking
tradition (Drori, Jang, and Meyer 2006). Soon
after the new institutional lens was ground,
though, it was adopted by organization stud-
ies scholars as a tool with which they could
ply their trade. In the early years of the field
(long before the new institutional framework
was fashioned), organization studies scholars
embraced Litchfield and Thompson’s exhor-
tation to focus attention on the administrative
process, which they characterized as a ‘cycle
of action,’ consisting of decision making,
programming, communicating, controlling
and reappraising (Litchfield 1956: 12).
As the field developed, the conception of the
administrative process broadened. Mintzberg
(1971) discovered that the administrative
process consisted of a wide range of activi-
ties that were divorced from decision
making, programming, etc. And Pfeffer
(1976) identified the institutional level as an
important and largely ignored domain of
managerial action. When it emerged in the
late 1970s, the new institutionalism became a
new theoretical resource from which
hypotheses could be drawn for deductive
work and to which new ideas could be added
via inductive work on virtually every
substantive topic of the day. It is now hard to
think of a substantive topic within organiza-
tion studies where the new institutionalism
has not left its mark; from the hiring of
workers (Dobbin and Sutton 1998), the
choice of accounting systems (Mezias 1990),
the adoption of innovations (Westphal,
Gulati, and Shortell 1997), the implementa-
tion of innovations (Zbaracki 1998), to the
promotion of top managers (Ocasio 1999),
the pursuit of particular strategies and
structures (Fligstein 1990), the adoption of
particular growth tactics (Palmer et al. 1995);
754 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
and the understanding of temporal and spa-
tial variation in all of the above (Guler,
Guillen, and Macpherson 2002; Schneper
and Guillén 2004).
Assessment
This discussion suggests that new institution-
alism is now an extremely comprehensive
theory. Proponents of the new institutional-
ism have drawn upon several of the social
sciences for their insights, although they
could range further from their largely socio-
logical base to incorporate the work of polit-
ical scientists, economists and, in particular,
the work of psychologists to a greater extent.
The proponents of the new institutionalism
have also plied their trade at multiple levels
of analysis, although they could certainly
stray further from the highest levels to exam-
ine organizational and even more individual
level phenomena. Finally, proponents of the
new institutionalism have used their theoret-
ical lens to examine a wide range, perhaps
the full range of organizational phenomena
recognized by contemporary organization
studies scholars.
With this said, we wonder whether some
of the NI’s most penetrating insights are at
risk of being lost as it expands to incorporate
multiple disciplines, operate at multiple
levels of analysis, and address a cornucopia
of substantive topics. We think that such a
risk is exacerbated by the fact that organiza-
tion studies scholars have increasingly been
concentrated in graduate schools of manage-
ment and business and that their scholarship
is influenced by managerial and business
concerns (Augier, March, and Sullivan 2005;
Perrow 2000). The unique insight of the
new institutionalism, an insight that it
shares with few if any other organization
theories, is that organizations and organiza-
tional participants are products of the larger
social structure; in particular, the cognitive
elements of that structure. As a result, organ-
izations and the people who inhabit them act
in ways that are taken for granted as appro-
priate and even presumed to be rational,
despite the fact that these ways of being are
fundamentally arbitrary. In the hands of con-
temporary organization studies scholars,
these fundamental insights have increasingly
been used to develop theories, analyses, and
even prescriptions about how organizational
leaders can obtain legitimacy and attendant
benefits for their organization. And in the
process, a theoretical perspective that views
organizational action as fundamentally non-
rational and non-functionalist becomes a tool
for analyzing behavior in and of organiza-
tions in such a way that it is seen as even
more self-consciously instrumental.
Cumulative theory
If a general theory explains organizations in
multiple settings and a comprehensive theory
draws on many disciplines to explain a wide
range of organizational phenomena at multi-
ple levels of analysis, a theory that is cumu-
lative is one that grows better with additional
studies that expand its scope, strengthen its
powers, and reveal and diminish its limita-
tions. For a theory to grow, researchers must
self-consciously tackle the theory as an
object of study, growing and pruning it as
evidence and argument support. From a the-
oretical standpoint, it must refine existing
concepts, clarifying and perhaps in the
process bifurcating existing concepts. It must
refine existing relationships, identifying
scope conditions and moderating and
mediating mechanisms, and, of course, it
must add new concepts and relationships.
This can be accomplished deductively, by
examining logical gaps, limitations, and
inconsistencies in the corpus of ideas that
compose the theory. And it can be accom-
plished inductively, by conducting research
to examine the adequacy of existing concepts
and relationships.
There are signs that proponents of the
new institutionalism self-consciously attempt
to build on one another’s work. Perhaps
most notably, and discussed above, the con-
cept of institution has become increasingly
more multidimensional. Scott and Meyer
 IS THE NEW INSTITUTIONALISM A THEORY?
([1983]/1991) distinguished between techni-
cal environments, in which organizations
compete with one another on the basis of
their efficiency and effectiveness of opera-
tion, and institutional environments, in which
organizations vie for legitimacy. Later, Scott
(1987) contended that all environments are
institutional, but differ in their institutional
character. Importantly, in Scott’s formula-
tion, the market is one type of institutional
setting, in which organizations follow the
logic of competition and compete on the
basis of efficiency and effectiveness. More
recently, Biggart and Delbridge (2004) elab-
orated a typology that distinguishes between
different types of market settings on the basis
of their institutional structure.
Similarly, the concept of loose-coupling
was initially conceived as a baseline assump-
tion of the new institutionalism, allowing
proponents of this perspective to analyze the
adoption of innovation in market contexts.
For-profit organizations could more easily be
understood to incorporate institutionalized
elements that increased their legitimacy but
not their efficiency if those elements were
integrated in a way that left them loosely-
coupled with their technical core. However,
Westphal and Zajac (2001) reinvigorated the
concept of loose-coupling by characterizing
it as a variable attribute of organizations
which could be analyzed like other innova-
tions. They contended that stock buy-back
programs became legitimate as agency
theory became widely accepted, because
they promised to reduce the separation of
ownership and control which generated
agency costs. They argued, however, that
firms typically announced but did not imple-
ment such programs so that they could obtain
the legitimacy benefits from them without
actually changing corporate policy. They
demonstrated that firms adopted such
loosely-coupled stock buy-back programs to
the extent that they were linked to other firms
that had already pursued them.
Certainly, though, there are areas where
the new institutionalism appears to be
spinning its wheels more than it is making
755
forward progress. Perhaps no area is defined
by the spinning of wheels more than the new
institutionalist work on the diffusion of inno-
vation. Early work in this new institutionalist
domain generated evidence that issues of
efficiency and effectiveness became less
important in the adoption of new innovations
as new practices proliferated (Tolbert and
Zucker 1983). Subsequent work built on this
early research by showing how normative
processes (the incorporation of professionals
who championed innovations) and mimetic
processes (linkage to other organizations
already embracing the innovations) stimu-
lated adoption at the late and early stages
of a new practice’s proliferation (Palmer,
Jennings, and Zhou 1993). Additional work
added precision to this research, focusing on
how the characteristics of adopters, objects
of social comparison, and the innovations
themselves shaped diffusion (Davis and
Greve 1997). However, research on the diffu-
sion of innovation typically failed to consider
the operation of coercive processes
(Mizruchi and Fein 1999). Instead, a plethora
of studies proliferated that evaluated essen-
tially the same hypotheses as applied to dif-
ferent kinds of organizations and different
kinds of innovations.
Assessment
The new institutionalism has exhibited signs
of growth, as concepts become differentiated
and refined and relationships become elabo-
rated, partly as the result of empirical
research. To this conclusion, though, we add
one caveat. As the NI might predict, organi-
zations studies scholars seeking legitimacy
for their own work often cast their work as
falling under the protective umbrella of theo-
retical perspectives in vogue at the time. We
think that too often the new institutionalism
has served as a shade tree under which organ-
ization studies scholars, some of whom are
only peripherally connected to the new insti-
tutionalist project, have found company and
support with little in the way of self-criticism
and self-improvement. This was perhaps to
be expected in the theory’s adolescence, as
756 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
scholars promoted new institutionalism as
superior to alternative theories such as eco-
nomic perspectives. However, for theoretical
development the NI community is obliged to
consider issues of validity, paradigmatic
purity, application, methodologies, and other
matters that reveal the strength and limits of
the NI.
ALTERNATIVE MODELS OF THEORY
Our assessment of the theoretical status of
the new institutionalism uses Litchfield and
Thompson’s model of theory as they devel-
oped it 40 years ago as a benchmark. We
adopted this yardstick because we believe the
most contemporary organization theorists
develop their ideas with this model of theory
building in mind. However, there are compet-
ing models of doing organization studies. In
this section we briefly review three alterna-
tive conceptions of what constitutes a ‘good’
theory: the social mechanism approach,
postmodernism, and critical realism.
Furthermore, we assess their suitability for
developing the new institutionalism as a
theoretical enterprise.
The social mechanism approach
Recently Hedström and Swedberg (1998)
proposed the articulation of cause and effect
relationships called social mechanisms that
occupy a position between pure description
and universal laws. These postulated middle-
range relationships do not hold in all contexts
and cannot be used to predict social develop-
ments. Rather, they can only be drawn on to
explain social developments in specific con-
texts after the fact. Davis and Marquis
(2005a; see also Davis 2006) are the fore-
most proponents of the social mechanism
approach in organization studies. They con-
tend that this approach is particularly appro-
priate in the contemporary period because
social mechanism reasoning is particularly
useful in explaining organizational change
and because current organizational realities
are in flux. Further, they argue that the new
institutionalism is a particularly fruitful
archive from which to draw social mecha-
nisms, because the new institutionalism
operates at the field level of analysis and
organizational fields are in flux. This
approach to organization theory differs from
the Litchfield and Thompson approach in
important ways. It eschews general theory
and cumulative theoretical development. It
also eschews prediction, which is inherent in
the L&T view. Importantly, Davis and
Marquis contend that organization theorists,
at least macro-organizational behavior theo-
rists, have already largely embraced this
approach. Davis (2005) reports a survey of
the last 10 years of Administrative Science
Quarterly that reveals that the vast majority
of macro-organizational behavior articles are
‘problem-driven’; that is, motivated by a
desire to explain events in the world rather
than by a desire to test a particular theoretical
idea. Furthermore, most of these problem-
driven articles drew on multiple theories to
develop possible (sometimes alternative)
explanations of these events.
Davis and Marquis (2005a) review a vari-
ety of studies that use the social mechanisms
approach and draw on institutional theory to
implement this approach, one of which is
Davis and Marquis’s (2005b) own study of
the causes and consequences of convergence
in corporate governance form, as evinced in
the listing of foreign firms on the New York
Stock Exchange (NYSE) and Nasdaq. Davis
and Marquis drew on institutional theory to
identify several social mechanisms that
might explain these listings. Foreign firms
might list on the NYSE and Nasdaq after
they turned American, presumably suggest-
ing the operation of the institutional mecha-
nism known as mimetic isomorphism. Or
firms might turn American after they have
been listed on the NYSE and Nasdaq for a
while, perhaps suggesting the operation of
coercive mechanisms. Or foreign firms might
turn American to the extent that they are tied
 IS THE NEW INSTITUTIONALISM A THEORY?
via interlocking directorates to American
firms, presumably suggesting the operation
of normative mechanisms. Or foreign firms
might remain inert, while new firms are born
American, suggesting the operation of
imprinting. According to Davis and Marquis,
the new institutionalism could not provide
researchers with an a priori definitive expla-
nation of why foreign firms listed on the
NYSE and Nasdaq. But it could provide a
number of possible explanations of why
firms listed on the NYSE and Nasdaq that
could be tested for post hoc plausibility.
Their empirical analysis provided support for
the imprinting mechanism.
This use of institutional theory as a com-
pendium of causal arguments that can be
drawn upon to explain organizational phe-
nomena seems sensible. There are many con-
crete historical developments that have
organizational dimensions and that cry out
for adequate explanation. For example, the
emergence and proliferation of terrorism,
especially state-sponsored and religion-
inspired terrorism, throughout the world is an
important phenomenon, perhaps most
obviously because it is responsible for con-
siderable political instability and much
human suffering. Yet our understanding of
terrorism is infantile (Stampnitzky 2006) and
terrorism is certainly an organizational
phenomenon, requiring complex coordina-
tion. We think an analysis of terrorism that
draws on organization theory, including the
new institutionalism, could be exceptionally
insightful (cf. Perrow 1999).
With this said, we think that adopting the
social mechanism approach to theory build-
ing to the exclusion of the L&T approach
would be worrisome. Perhaps most impor-
tant, a single-minded application of the
social mechanism approach would by defini-
tion bring the creation of new theory to a
halt. If we only borrowed social mechanisms
from existing theory to develop explanations
of observable phenomena, the store of social
mechanisms available to explain observable
phenomena would not grow. In order for
theory to grow, proponents of the social
757
mechanism approach would also have to
embrace the process called ‘reappraisal,’
which Litchfield and Thompson considered
fundamental to the scientific method.
Specifically, proponents of the social mecha-
nisms approach would have to view efforts to
validate one as opposed to another possible
social mechanism explanation of an organi-
zational development as an opportunity to
evaluate and thus confirm, reject, or refine
existing social mechanisms arguments.
Postmodernism
Postmodernism has a variety of expressions
(cf. Weiss 2000; Deetz 2000). One can distin-
guish four thrusts of postmodernism in
organization studies. A substantive thrust
characterizes contemporary organizations
as qualitatively different (i.e., as postmodern)
from previous (modern) organizations.
A methodological thrust advocates the use of
deconstruction to reinterpret dominant
understandings of organizations. Perhaps
most importantly, deconstruction provides a
means to read scientific understandings of
organizations as value-laden and biased
accounts that are but one of many possible
interpretations. An epistemological thrust,
referred to as the skeptical postmodernism
by Kilduff and Mehra (1997), calls into
question the enterprise of attempting
to uncover the truth about organizations,
by calling into question the independent
existence of organizational reality and main-
taining the existence only of multiple inter-
pretations of a presumed reality. Finally, a
theoretical thrust, characterized as the affir-
mative postmodernism by Kilduff and Mehra
(1997), attempts to develop new, interesting,
and exciting understandings of organiza-
tions, at the same time holding in reserve
various degrees of skepticism about the inde-
pendent existence of organizational reality. It
is this theoretical thrust that is most relevant
to our analysis here.
The types of understandings that the
affirmative postmodernism develops about
758 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
organizations have a number of defining
characteristics, some of which they share
with understandings produced by other alter-
native modes of inquiry, such as feminist
theory, critical theory and post-structuralism
(Agger 1991). Postmodern understandings
tend to explicitly acknowledge the point of
view from which they are developed. Further,
the points of view from which postmodern
understandings are developed tend to be
those of constituents who are typically
ignored (e.g., subordinates, women, minori-
ties, etc.). Postmodern understandings tend
to be conveyed through a more personal lan-
guage. They tend to be less definitive, invit-
ing leeway for audience interpretation. And
they may aid in stimulating practical action
on the part of the constituency from whose
point of view they are formulated. There are
relatively few studies that include all of these
characteristics, although there are a few
exemplary studies, perhaps most famously
Martin’s (1990) analysis of a male top man-
ager’s utterances about a pregnant female
employees’ devotion to the firm.
While the new institutionalism does not
exhibit any of the above four specific charac-
teristics, it does tend to exhibit a general
point of view that resonates with postmod-
ernism. Postmodernism takes seriously the
idea that reality (to the extent that we can
speak of reality as an independent state) only
comes into practical existence insofar as it is
encoded in representations of social actors.
Thus, postmodernism considers representa-
tions of reality (and the relationships among
them), rather than reality itself (and the rela-
tionship of representations to it), as the cru-
cial objects of study. The earliest proponents
of the new institutionalism called into ques-
tion the independent existence of the techni-
cal realities of organizational structures and
practices. They considered many organiza-
tional structures and practices to be rational-
ized myths that took on the appearance of
reality and were taken for granted as such.
Thus, educational organizations adopted
structures and practices prevalent in business
organizations because they were assumed to
be efficient. Insofar as the adoption of these
structures and practices facilitated their sur-
vival, by bringing adopting organizations
legitimacy and resources, they acted as if
they were efficient.
With that said, the proponents of postmod-
ernism tend to eschew the pursuit of theories
composed of precise constructs and formal
relationships that apply across contexts and
grow cumulatively independent of the phe-
nomena that they are designed to apprehend
(Van Maanen 1995). Thus, to the extent that
new institutionalists embrace a postmodern
sensibility, they will likely impede the
development of the new institutionalism as a
theory in the Litchfield and Thompson sense.
We do not by any means intend this assertion
to imply a critique of the postmodern
perspective. We merely wish to note what we
believe is the obvious; that the pursuit of the
postmodern perspective, like the pursuit of
the social mechanisms approach, is funda-
mentally incompatible with theory building
in the Litchfield and Thompson sense.
Critical realism
Critical realism (CR) is a largely British
philosophy developed by Roy Bhaskar
([1975]/1997, [1979]/1998, 1986) and others
(e.g., Archer 1995; Collier 1994; Sayer
[1992]/1997, 2001) that offers a ‘third way’
between positivism and postmodernism. In
contrast to both approaches, it begins with
the ontological nature of the objects under
study, which then determines their proper
epistemology (i.e., how they can be known),
rather than the other way around (termed the
‘epistemic fallacy’). CR has become increas-
ingly popular among social theorists and
practitioners. However, it has only recently
begun to make headway into the organization
studies and management literature (e.g.,
Ackroyd and Fleetwood 2000; Ekström
1992; Reed 2005).
Similar to the social mechanisms
approach, CR provides an explanatory
framework based upon the identification of
 IS THE NEW INSTITUTIONALISM A THEORY?
the mechanisms that produce the organiza-
tional phenomena observed by researchers.
In contrast to their approach, however, CR
provides a stratified social ontology distin-
guishing between the levels of the real, the
actual, and the empirical. Acknowledging
that all social phenomena operate in open
systems, these distinctions allow critical
realists to explain why a particular mecha-
nism that is ‘in play,’ so to speak, may only
be contingently actualized and empirically
identified. Hence, the powers of generative
mechanisms operate ‘transfactually’ in open
systems and may not be realized due to the
operation of countervailing causes (i.e., other
mechanisms). That is, their powers ‘may be
possessed unexercised, exercised unrealized,
and realized unperceived (or undetected) by
[humans]’ (Bhaskar [1975]/1997: 184).
Thus, the stratified ontology of CR may give
a firmer grounding to Davis and Marquis’s
(2005a: 336) invocation of Coleman’s notion
of ‘sometimes-true theories.’ Furthermore,
unlike Litchfield and Thompson’s view,
which focuses on identifying empirical regu-
larities, that is regularities that are actualized
and empirically observed, CR identifies the
important theoretical interest to lie at the
level of the real.
For example, Leca and Naccache (2006)
approach the NI from a critical realist per-
spective, providing a non-conflationist
account of agency and structure in their
analysis of institutional entrepreneurship.
Corresponding to the three domains identi-
fied by CR, they place the actor’s experience
at the domain of the empirical, institutions at
the domain of the actual, and institutional
logics at the level of the real. At the level of
the empirical, organization researchers are
interested in interpreting the subjective
meanings actors give to their activity through
discourse analysis. At the level of the actual,
institutions can be identified, even if actors
do not recognize them because they have
become taken-for granted. Finally, the insti-
tutional logics that underlie and shape insti-
tutions lie at the level of the real. ‘Depending
upon contextual factors and the actions of
759
actors, institutional logics will unfold in the
domain of [the] actual as institutions.
Institutions are the results of the ways in
which actors transpose those institutional
logics through precise scripts, rules, and
norms in specific contexts’ (2006: 632).
The identification of these abstract causal
powers, the institutional logics, is carried
out by organization researchers through
a process of retroductive logic. Following
Sayer (1992), Leca and Naccache (2006:
635; also see Bhaskar [1975]/1997) note
that there is a three stage process where
researchers observe connections or regulari-
ties that have been actualized in an institu-
tion, build hypothetical models that might
account for the observed phenomena, and
then subject the models to empirical scrutiny.
By incorporating CR into the new institution-
alism they hope that this approach will be
able to ‘bring agency back into the institu-
tional framework without denying the crucial
importance of institutional embeddedness
and thus move beyond the vague notion of
institutional pressures to investigate the
dialectical interplay between actors’ actions
and institutional embeddedness’ (Leca and
Naccache 2006: 643; cf. Archer 1995).
CR, then, appears to potentially provide
the new institutionalism with an adequate
response as to what their theory is. That is,
the various concepts, tendencies, and rela-
tionships that make up the new institutional-
ism refer to the generative mechanisms
(consisting of both ‘things’ and ‘relation-
ships’) of complex organizations that, in
open systems, may or may not be actualized
and are contingently empirically identified
by social scientists. Since social scientists
will never be able to construct a completely
closed system, theory choice must be
decided by explanatory power, rather than
empirical prediction, although this will
certainly remain an important, but not final,
criterion. A general theory is justified
because complex organizations share similar
powers and liabilities across an array of orga-
nizational domains, from hospitals to corpo-
rations, from schools to the criminal justice
760 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
system; the same mechanisms (e.g., loose-
coupling or isomorphic pressures) are at
work. Finally, institutional processes, which
have received less examination in the
new institutionalism than they deserve
(Barley and Tolbert 1997), such as
institutionalization and deinstitutionaliza-
tion, might be profitably explored through
the ‘morphogenetic approach’ devel-
oped by Archer (1995; Willmott 2000; Mutch
2005). Nevertheless, it seems that critical
realism may be open to the same problem
as the social mechanisms perspective if
the process of ‘reappraisal’ is not expli-
citly incorporated into its theoretical
approach.
CONCLUSION
Is the new institutionalism, after 30 years,
fulfilling its promise as a theory in Litchfield
and Thompson’s terms? Our answer is a
qualified ‘yes.’ The new institutionalism has
developed a multitude of measurable con-
cepts and empirically verifiable relationships
to describe and explain organizational phe-
nomena. The new institutionalism also
appears to be one of the most general and
comprehensive theories plied by organiza-
tional scholars today; arguably more general
and comprehensive than a number of theories
that came before it such as the resource
dependence and population ecology
perspectives. And cumulative growth in the
new institutionalism, resulting partly from
empirical research, can be detected. Is the
new institutionalism a theory in other senses
of the term as well? Again, our answer is a
qualified ‘yes.’ It has been used as a library
from which researchers can borrow social
mechanisms to explain organizational
phenomena. And that branch of the new
institutionalism that seeks to uncover the
operation of taken-for-granted cognitive
structures resonates with the main tenets of
postmodernism. Finally, the general orienta-
tion of the new institutionalism is compatible
with the emerging critical realist perspective,
which seeks to carve out a middle ground
between positivism and postmodernism.
Clearly there is much that can be
done to move the new institutionalism further
in the direction of a theory in all four senses
of that term. A theoretical understanding of
the micro-level has only been weakly
developed by the new institutionalism. For
example, we think that it would useful to
build upon the sociology of culture
(DiMaggio 1997), to improve our under-
standing of categories such as conventions
and scripts (Biggart and Beamish 2003),
and to engage with symbolic interactionism,
dramaturgical, ethnomethodological and
other interactionist theories that presume
institutionalized understandings that are
necessary for temporal stability in social
interaction.
The question in our minds is how much
further should the new institutionalism go?
As children in the US, we were told that if we
were to dig deep enough, we would end up in
China. That is, we would end up not at the
center of things, but rather in different even
antagonistic place. We think this just might
be the case with theories. At some point,
attempts to develop a theoretical orientation,
to make it more elaborate, more general,
more comprehensive, and more encompass-
ing of other modes of theorizing threatens to
transform it into something else, its theoreti-
cal competitors. For example, it seems
possible that attempts to build up the new
institutionalism’s currently underdeveloped
understanding of individual level phenome-
non by drawing more on psychology
and social psychology might result not
in the articulation of new ideas but rather the
re-labeling (as new institutional) of old
ideas. Thus we think that new institutional
scholars should remain alert to the
possibility that they are engaging in
semantic games and stay focused on the
goal of identifying truly new insights
about behavior in and of organizations as
they deepen and expand the scope of NI
theory.
 IS THE NEW INSTITUTIONALISM A THEORY?
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How to Misuse Institutions
and Get Away with It:
Some Reflections on
Institutional Theory(ies)
THE ABUNDANCE OF DEFINITIONS
The editors of this volume asked me to write
about the uses and misuses of institutional
theory – a quest that provided me with a per-
verse pleasure. In my reading, the most inter-
esting interpretations of institutional theory
result from the misuse of the term ‘institu-
tion’; in Latin that means a human, inten-
tional act of creating and enacting some type
of collective practice. As noted by March and
Olsen (1989) in their overview of various
definitions of the word, this meaning is used
primarily in law and economics. In the every-
day meaning of the word (which enters
almost every scholarly text), however, an
institution is a public administration organi-
zation. Another meaning, close to it, is the
Goffmanian definition: ‘Social establish-
ments – institutions in the everyday sense of
that term – are places such as rooms, suites of
32
Barbara Czarniawska
rooms, buildings, or plants in which activity of
a particular kind regularly goes on’
(Goffman, 1961: 15, my italics). But Goffman
also spoke of ‘members of an institution’
(1961), which is closer to Mary Douglas’s
suggestion that institutions are legitimized
social groupings (Douglas, 1986: 41).
None of this, however, is close to what
Thorsten Veblen (1899) seemed to mean
when speaking of institutions. To begin with,
Veblen used the term ‘institution,’ assuming
that it did not require a definition: ‘The insti-
tution of a leisure class is found in its best
development at the higher stages of the
barbarian culture’ (1899: 1); and ‘In the
sequence of cultural evolution the emergence
of a leisure class coincides with the begin-
ning of ownership. This is necessarily the
case, for these two institutions result from the
same set of economic forces’ (1899: 15).
Veblen was a cultural evolutionist, and
770 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
believed that people who act collectively
form certain patterns of action that are even-
tually taken for granted. If they are contested
or broken, it results in normative justifica-
tions, corrections or/and sanctions. Such nor-
matively justified patterns of action are
institutions.
Gabriel Tarde would have agreed, but
added that people also imitate one another;
after all, it was Tarde who launched the
notion of diffusion in social sciences. He did
not think, however, that ideas spread like par-
ticles; in his view, particles may spread the
way ideas do, as he believed that natural sci-
ences should borrow metaphors from social
sciences, not the other way around.
Tarde is often seen as a ‘diffusionary evo-
lutionist,’ as he differed from diffusionists
(the early school in anthropology, repre-
sented by Franz Boas, 1904/1974) in noting
the variation inherent in each displacement,
and from evolutionists in pointing out the
role of action, i.e. imitation. Thus he
spoke of ‘evolution by association’ (Tarde,
1893/1999: 41) à la Stephen Jay Gould, or
‘diffusion by transformation.’ His influence
is rarely acknowledged by the contemporary
institutionalists, however, as they seem to
prefer his rival, Emile Durkheim. This incli-
nation may change, as ‘Tardomania’ has sup-
posedly made an appearance, at least in
France, Italy, Germany, and Denmark
(Mucchielli, 2000; Latour, 2002).
At this point, some readers may expect a
recommendation that the interested commu-
nity of scholars should mobilize, turning
institutionalism into a ‘proper theory,’ with
proper definitions of its subject and a set of
axioms and logically connected statements.
This, in my view, would be the death of insti-
tutional theory as we have learned to know
and appreciate it. Apart from the fact that any
social theory would be killed by strict for-
malization, the strength of institutional
theory lies in the tolerance of its propagan-
dists. Here, I think, most thanks should be
directed to Walter W. Powell and Paul J.
DiMaggio (1991). Had they insisted on
policing the field, it would have turned
barren in no time. As it is, institutional theory
is not a theory at all, but a framework, a
vocabulary, a way of thinking about social
life, which may take many paths. It would be
my recommendation to attempt an institu-
tional theory account of institutional theory.
This is probably too large a task for a
single author or a single text, at least this
author and this text; the Reflection part of
this volume consists, in fact, of contributions
toward that purpose. My own input com-
prises three pieces that may be added to a
larger mosaic: a reflection on the local varia-
tions of institutional theory, a commentary
on the (mostly missing) connection between
institutions and technology, and a suggestion
of possible gains from insights concerning
institutions in literature theory.
LOCAL TRANSLATIONS:
‘SCANDINAVIAN INSTITUTIONALISM’
When the word got around that Steve Barley
and Pamela Tolbert (1997) had written about
‘European institutionalism,’ all of us in
Scandinavia ran to check who and what
would be quoted. Much to our surprise, the
‘European institutionalists’ turned out to be
Max Weber and Emile Durkheim and the
contemporary writers were represented by
Anthony Giddens. Not for the first time
we could observe that ‘local knowledge’
seems to be of interest primarily when it
reproduces ‘global knowledge’, which is that
which circulates at any given time among
many localities.
Yet all local translators arrive at their own
version or versions of the global idea. Guje
Sevón and I coined the term ‘Scandinavian
institutionalism’ (Czarniawska and Sevón,
1996) to denote works from Denmark,
Norway, and Sweden, written under the
influence of Richard W. Scott, James G.
March, and John W. Meyer.1 What seemed
to characterize this group of texts and
authors was a common interest in the con-
struction and deconstruction of institutions
 SOME REFLECTIONS ON INSTITUTIONAL THEORY(IES)
(institutionalization and deinstitutionaliza-
tion) as the most fruitful way of conceptual-
izing social order.
This interest may be seen as being shared
by all social sciences, so further delimita-
tions are needed. The Scandinavian transla-
tors were mostly organization scholars, so
the issue of organizing was of central interest
to them. For many decades, organization
theory has been developed around the
rational theory of choice as applied to deci-
sion making. This theory did a poor job of
explaining the results of studies conducted in
the field of organizational practice. To
explain why the Scandinavians exhibited
such great interest in new institutional theory,
a few words on the tradition of organization
studies in Scandinavia are in order.
To begin, Scandinavian organization theo-
rists had traditionally had a strong interest
in the practice of organizing. Long before
Pierre Bourdieu legitimized ‘social practices’
as the central study object, Scandinavian
researchers studied ‘praxis’ (‘practices’
cannot be used in plural in Scandinavian lan-
guages) of organized work. This interest led
naturally to a great number of field studies,
facilitated by easy access, especially to public
sector organizations, where the transparency
rule permitted researchers access to anything
that was not classified as confidential. As a
result, perhaps, the approach has been
strongly process-oriented, as opposed to
structure-oriented.
Furthermore, in conscious opposition to
the universalizing tendencies, the researchers
were taking the embeddedness of the prac-
tices they studied very seriously indeed. This
focus did not make their interests parochial;
indeed, connectedness was another typical
trait of Scandinavian research (Czarniawska
and Sevón, 2003). Most authors are well
versed in the North American tradition, albeit
they treat it critically; are familiar with
European developments; and, more recently,
direct their curiosity to the remaining conti-
nents, especially Asia and Australia. This
practically demands a great openness to other
academic disciplines, and results in the
771
transdisciplinary character of Scandinavian
organization theory, with its roots in econom-
ics and engineering, but also with
strong links to sociology, psychology, and
anthropology.
Field studies were rendering unequivocal
results; it was action rather than decision that
was at the center of organizing (Brunsson,
2007). As pointed out by March and Olsen
(1989), organizational action heeds the logic
of appropriateness, and not, as the theory of
rational choice would have it, the logic of
consequentiality. Actions are decided on the
basis of actors’ classifications of the situation
in which they find themselves, as well as
their own identity. Logic of consequentiality
or of rational choice is used to legitimize the
actions undertaken, especially when ques-
tioned. The combination of insights of one of
the classic authors of decision-making theory
and a Norwegian political scientist resulted
in the theory that fit the data, as the
Scandinavians found them.
Why ‘new’ institutionalism? The ‘old’
institutionalism emphasized the central role
of norms and socialization processes, of rule
and role conflict, and revealed that rules
and identities are taken for granted in a
‘normal attitude.’ Institutions could be thus
defined as collections of stable rules and
roles and corresponding sets of meanings and
interpretations.
New institutionalism, as presented by
Powell and DiMaggio (1991), adopted the
centrality of the logic of appropriateness in
organizational action, and continued the
emphasis on rules and roles, as well as the
construction of meaning that occurs in organ-
izations. It also radicalized older approaches
by presenting identities as results of actions
rather than their antecedents (see especially
Meyer, 1986); it dynamized them by focus-
ing upon the process of rule development
(institutionalization); and it increased their
complexity by adding nuances to the theory
of conflict.
It has been suggested by many critics,
however, that the issue of change was not
properly explained by the new institutionalists.
772 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
It was understandable in light of the fact
that the main thrust of the institutionalist
approach was to contradict traditional orga-
nizational theory which, informed by rational
choice theory, was based on the assumption
that change was an organizational norm.
Stability, not change, was the norm, claimed
the institutionalists.
Powell’s (1991) defense did not fully
answer this criticism; he claimed that change
must be treated as an exception rather than as
a rule. Although this insistence on stability
over change can be seen as part of the
provocative program of the new institutional-
ism, a further glimpse into the roots of the
‘old’ institutionalism can be revealing.
Institutionalism’s philosophical roots are
usually be traced back to the Chicago school
of pragmatism, especially to George Herbert
Mead (Aboulafia, 2001). Two of the authors
who inspired Mead’s understanding of the
social world were the European psycholo-
gist, Wilhelm Wundt, and the US psycholo-
gist, James Watson, one of the founders of
behaviorism. The only dissension between
Mead and Watson was over the fact that the
symbolic meaning of communication was
not included in Watson’s behaviorism. Thus
Watson’s approach, according to Mead,
failed to incorporate what was truly human.
They agreed, however, that institutions were
‘natural’ systems, and thus stable (see also
Scott, 1981).
Was this conception wrong? Of course
not – unless we permit the existence of
supernatural forces, all we know is natural.
Culture, like people and everything else, is
the product of nature. This does not give us
an explanatory apparatus of any power, how-
ever. In such light, population ecology would
be the only theory that made sense.
Unfortunately, this type of explanation did
not allow the Scandinavians to interpret what
they were repeatedly witnessing in the field:
that, although ‘planned change’ never fully
succeeds, people do persuade each other to
change their opinions, beliefs, and ways of
acting – and not only by mistake. The results
are paradoxical: planned change stabilizes,
whereas routines create novelty by faulty
reproduction.2
This acknowledged ambiguity of change
was the focus of what we called a
Scandinavian institutionalism. It can be said
to have originated in the works of Johan
Olsen and Nils Brunsson (see e.g. Olsen,
1970, 1989; Brunsson and Olsen, 1993).
Many examples can be found in edited vol-
umes such as Scott and Christensen, 1995;
Czarniawska and Sevón, 1996, 2003, 2005;
or special issues of American Behavioral
Scientist, edited by Christensen, Karnøe,
Pedersen, and Dobbin (1997) and
Westenholz, Pedersen, and Dobbin (2006).
Born mainly in contact with the US new
institutionalists, the Scandinavian institution-
alism nevertheless reached for additional
sources of inspiration, to be able to address
the issue of change more fully. Change
and stability together were seen as an organi-
zational norm, and the logic of appropriate-
ness as complementary to the logic of
consequentiality.
Describing organizations as a combination
of change and stability assumed a paradoxi-
cality in organizational life (in tune with
Luhmann’s theory of autopoietic systems –
see Luhmann, 1986; and Seidl and Becker,
2005). The dynamic focus has been main-
tained; the processes that attract the attention
of researchers are processes of identity for-
mation and deconstruction, rule establish-
ment and rule breaking, institutionalization
and deinstitutionalization.
The emphasis on the processes of construc-
tion indicates another source of inspiration,
which can be traced to the enormous popular-
ity in Scandinavia of the works of
Peter Berger and Thomas Luckmann (1966,
1995; Berger, Berger, and Kellner, 1974;
Luckmann, 1978), heirs of Alfred Schütz
and his genial combination of European phe-
nomenology and American pragmatism.
Considering Mead’s influence on US institu-
tionalism (especially visible in the work of John
Meyer, Walter Power, and Paul DiMaggio),
the bridge was not difficult to assemble.
The constructivist version of institution
 SOME REFLECTIONS ON INSTITUTIONAL THEORY(IES)
theory permitted the Scandinavians to con-
tinue their tradition of organization studies,
consisting of fieldwork with the processual
focus. Their main interest remained the ques-
tion of how institutions emerge, change, and
vanish – not merely that they do. They
offered a type of research complementing, on
the one hand, largely speculative historical
research, such as that of Torstein Veblen,
Gabriel Tarde, Thurman Arnold, and Michael
Oakeshott;3 and, on the other hand, the statis-
tical studies of the type for which John W.
Meyer and his collaborators are famous.
Thus Scandinavian research answers the
need for micro-studies of institutions, as for-
mulated by Renate Meyer (2006). A growing
collection of such studies will soon enable a
combination that seems desirable to me: a
series of field studies documenting in micro-
perspective institutionalization processes that
require decades, if not yet centuries.
What is needed, then, is a review of existing
local translations of institutionalism. I am cer-
tain there are others, but just as Renate Meyer
(2006) did not know about the Scandinavian
version, I have never heard of them. Revealing
and recording them will permit the achieve-
ment of two goals: creating a data basis of
micro-studies across places and times, and
applying institutional theory onto itself. More
of this in the second last section.
SOME THINGS MISSING?
TECHNOLOGY AND INSTITUTIONS
Supporters of numerous variations of social
constructivism engaged in a fight against sci-
entistic realism try to demonstrate that
people, not nature, construct culture; objects
were supposed to be ruled by different laws
than meanings are. In such interpretations,
organizational life was seen as being rife
with spiritual endeavors, and organizational
change seemed to be a change in symbols
and metaphors. The result was an unfortunate
debate around the question of whether or not
those ‘symbolic changes’ were accompanied
773
by ‘real changes,’ thus maintaining an
unnecessarily dualist view of organizations
and producing an unintended impression that
symbolic changes are ‘unreal’ (for a critique
of such dualism, see Gagliardi, 2006).
Studies of science and technology, such as
those by Latour and Woolgar (1979/1986),
Callon (1986), Callon and Latour (1981), and
Knorr-Cetina (1981, 1994), revealed that
objects and facts are socially constructed as
much as symbols are; that all human knowl-
edge is social; and that, as much as it is sen-
sible and practical to believe that things exist
even when nobody looks at them, it can never
be ‘proven’ or ‘demonstrated’ that they exist.
Thus the adjective ‘social’ as in ‘social con-
structivism’ is obviously redundant. The
point is that, in spite of the appearances of
stability and many stabilizing mechanisms,
among which is the emergence of institu-
tions, the reality is under constant construc-
tion. In tune with Tarde’s postulates, but to
the irritation of natural scientists, students of
science and technology have also demon-
strated that the practice of natural science is
much closer to that of social sciences and
humanities than anyone suspected.
At the same time, the Society/Nature
dichotomy was taken for granted in organiza-
tion studies as in most social science, causing
notorious problems when confronting tech-
nology. Scholars in the Tavistock tradition
(e.g. Rice, 1958; Woodward, 1965) tried to
fill the gap by introducing the notion of
socio-technical systems. Yet conceptual
energy was focused on the ‘socio-,’ and the
notion remained firmly dualistic. The con-
cept was revived by some authors during
sociology’s turn to technology throughout the
1980s (e.g. Mayntz, 1988; T. E. Burns and
Dietz, 1991), but primarily within the same
dichotomizing spirit, even if the ‘socio-’
part of the term was enriched by notions
of technological design and regulation.
Contingency theory within organization
theory started from a Tavistock perspective
(Burns and Stalker, 1961), but ended by actu-
ally excluding physical technology through
abstracting the notion of technology into task
774 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
structures of various kinds. And the new
institutionalism kept the distinction between
‘institutional environments’ and ‘technical
environments’ (Meyer and Scott, 1981), a
clear echo of the traditional distinction
between administration and industry, but
problematic at a time when administration is
run by computers, and engineering follows
management fads. A need for dispensing
with the dichotomy can be seen in the fol-
lowing quote from Goodman and Sproull
(1990), who concluded their overview of the
organization technology studies in the 1980s
with:
While there appears to be a movement to focus
primarily on technology as socially constructed, we
feel that some balance is necessary. There are
issues that concern technology as a physical reality.
These have not been well addressed and have
implications for doing work on technology and
organizations. ... We feel that a fruitful approach
would be to increase our understanding of both
the social and the physical aspects of technology ...
The real contribution, however, will be under-
standing the intersection between both forms of
reality. (1990: 260–261)
One such contribution could be found in
those approaches to science and technology
research in which nonhuman components
were conceptualized as social subjects of
action and as autonomous political actors
(Callon, 1988; Latour, 1996). Bernward
Joerges and I (1998) thought that technolo-
gies were better conceived of as instituti-
onalized organizing patterns than as
organizational members. Trust in machinery
is ‘system trust’ (Giddens, 1990), as distinct
from personal trust. In other words, we
extended to organizations Latour’s (1992)
argument that ‘technology is society made
durable.’ Technology makes organizing
durable, thus contributing to the institutional
stability of one of its products – the modern
organization – and through it many others.
What is more, this process is circular;
modern organizations, as users of machines
for producing machines and other artifacts,
have the task of inscribing institutional order
into matter.
By envisioning organizations as action
nets transcending face-to-face interactions
(Czarniawska, 2004), it is easy to see that the
existence of any such action net requires a
stable lock into large technical systems. The
telephone connects to satellite-based global
telecommunications systems, the toaster to
integrated electricity grids fed with nuclear
energy, and wrist watches to a technical
system called World Time. These ubiquitous
technical systems and their countless termi-
nals are easily overlooked by the layperson
and the organization theorist. Where does
water come from? From the tap, of course.
Joerges and I introduced the argument
that, through time, various institutional
responsibilities have been partially trans-
ferred to machine technologies, and therefore
partially removed from everyday awareness
(Joerges and Czarniawska, 1998). As organ-
ized actions are externalized in machines,
and as these machines grow more and more
complicated, norms and practices of organiz-
ing progressively devolve into society’s
material base; inscribed in machines, institu-
tions are literally ‘black-boxed’ (Whitley,
1972). As a result, ‘technical norms’ or ‘rules
of technology,’ although they regulate and
order social life, remain absent from the
attention of social scientists. Social scientists
are interested in social norms; technical
norms have, until recently, remained within
the purview of engineers. Two things have
happened recently, however: A series of
catastrophes has reintroduced material tech-
nology as a central concern in organization
studies (see e.g. Barry Turner, 1978/1997;
Perrow, 1984; Weick, 1988; Vaughan, 1990;
Shrivastava, 1993; Weick and Sutcliffe,
2001); and there is a growing interest among
organization scholars in science and technol-
ogy studies (see e.g. Czarniawska and
Hernes, 2005), especially in the computer
industry (see e.g. Lanzara and Mörner,
2005).
In order to get closer to the institutional
norms inscribed in the machines, one must
observe technical things functioning in their
‘natural’ – that is, social – contexts. Again,
 SOME REFLECTIONS ON INSTITUTIONAL THEORY(IES)
computers offer the most obvious examples,
within and outside of organizations. When
we start the new PC we just bought, a smil-
ing face will welcome us and let us know
what we are supposed to do, via a step-
by-step action program. For those of us who
have bought many a PC over the years, it
comes as no surprise to see that the instructor
in the program is no longer a man and the
learner a woman; the virtual world does its
best to follow the rules of political correct-
ness, with mixed results (Gustavsson and
Czarniawska, 2004).
Thus even such cases of intentional per-
sonal control are instances of institutional
control. The controlling power of technical
norms stems from the fact that a given prac-
tice has been incorporated into an artifact and
therefore seems impossible to question.
Technology is one of the ways in which soci-
ety controls itself, socializes its members by
unobtrusive measures, and thereby con-
stantly re-constructs itself.
Treating technical norms as social norms
of a particular kind does not imply a deter-
minist connection between the content of the
technical and nontechnical norms they may
or may not promote. A computer in a matri-
archal society would probably speak with a
female voice, but it would still be recruited
into supporting as well as subverting the
dominant institutional order. Rather than
unmasking particular power games or posit-
ing deterministic structural relationships, the
idea that institutions are inscribed in technol-
ogy calls for something like an ‘eth-
nomethodology of machines.’ What social
order does the dialogue with our computers
follow, and try to instill in us?
Technical norms are the institutional
structure of machinery. As such, they are
inscribed by organizations: Inscriptions
made by non-organized agents (graffiti, a
handwritten label on a homemade dish) are
not legitimate technical norms. Furthermore,
technical norms contain an explicit or
implicit reference to some quantitative meas-
ure. In our article, Joerges and I enumerated
three subgenres of technical norms that we
775
saw as being interrelated. We related them to
other, nontechnical genres of inscription:
norms for human action, machine behavior,
and the natural environment.
The first subgenre contains norms for
human action, defining human rights and
duties vis-à-vis a machine or some other
material artifact: ‘Turn bottle cap clockwise.’
The second subgenre has norms for machine
behavior: DIN A4, for example, the stan-
dard-sized page for European copying
machines; or 220 V, the regulation voltage in
Europe. Such norms prescribe the way spe-
cific technical artifacts are to be constructed
and how they are to function. The third sub-
genre consists of such norms for the natural
environment as emission and immission
limits for SO2 air pollution or the nitrate
content of groundwater.
These examples show that technical norms
are embedded in a complicated mesh of insti-
tutions. All three types of norms are specified
by various prescriptions for measuring and
testing and are, in general, connected to a
multitude of interrelated procedural norms.
In addition, technical norms are always refer-
ring back to nontechnical ones.
Organizations establish and maintain tech-
nical norms in relation to the environmental
technical norms, as well as norms for users
and producers like themselves. Furthermore,
technical norms always evoke manifold ref-
erences to nontechnical institutionalized
rules and cultural symbols (gender equality
for example). As mentioned, the process is
circular. Each machine norm implies a pro-
ducer and a user norm, and each producer
and user norm alludes to a machine norm.
Similarly, each type of norm reflects certain
normative images present in the wider con-
text, and vice versa. These interconnections
are best revealed in cases in which artifacts
are moved outside the institutional context of
their production, as documented by the
anthropologists’ sense of wonder over the
possible uses of Coca-Cola® cans in some
cultures (Sahlins, 2001).
The divisions among the three types of
technical norms are in no way unambiguous.
776 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
In fact, their attribution to one class or the
other may be controversial, and in this sense
may remove their taken-for-grantedness.
Blurring genres and redefining their bound-
aries is an affair of politics (‘Who are those
computer guys to tell me what to do?’), jokes
(‘Be nice to your computer, or else!’), and
experimentation (‘Let’s see if we can use it
this way instead’). In the everyday life of
organizations, all three blend, and the effects
of that blending are pragmatically decided;
for some purposes it is important to keep
them apart, for others, to blend them.
Organizational actors may or may not prob-
lematize their contents, form, or sheer exis-
tence, but researchers must. Technology
ought to become an interesting topic for the
institutionalists, precisely because technical
norms tend to operate outside the awareness
of their habitual followers. Smoothly and
reliably prescribed machine operations
become sealed off from representations of
organizational life, and, by the same token,
the constitutive parts of the action nets repre-
sented by the concept of ‘organization’
remain invisible, and are not given a voice in
organizational accounts.
SOMETHING COULD BE ADDED:
A NARRATIVE INSTITUTIONALISM?
My interest in narratology brought another
field with a developed theory of institutions
to my attention: literary theory (see e.g.
Zeraffa, 1973; Bruss, 1976, 1982). Thus the
idea of arranging an encounter between a
narrative approach and the new institutional-
ism (Czarniawska, 1997) was based on the
hope that the combination could lead to
greater metaphorical clarity in both. In what
follows, I neglect narratology in order to con-
centrate on institutional theory, which must
not be seen as a proof that it is only institu-
tionalism that can benefit from the encounter
(for a reverse example, see e.g. Gumbrecht,
1992, applying Luhmann’s theory to litera-
ture). However, I believe that proponents of
the new institutionalism, in order to live up to
their mission of explaining the social charac-
ter of the organizational world, need to
reflect on their own metaphors.
The issue at stake is much more than
metaphorical purism. It is possible to trans-
late the physical metaphors of new institu-
tionalism into literary categories as well as
the other way around, each time producing
some sort of creative displacement.4 In the
case at hand, however, the replacement of
physical metaphors by cultural ones may
finally remove the assumption of stability
that sneaked into the new institutionalism,
acknowledge the interplay between inten-
tions and contingencies, and permit self-
reflection.
I return to the notion of institutional iso-
morphism, as explicated in the original
DiMaggio and Powell article from 1983.
This notion assumes the homogenization of
an organization field due to coercive pres-
sures, mimetic processes, and normative
pressures. Later comments by Powell (1991),
written in reply to various criticisms,
addressed the sources of heterogeneity, albeit
treating it merely as a type of error variance.
The introduction to Powell and DiMaggio
(1991) took a more generous view of the pos-
sibility that homogenization may be accom-
panied by heterogenization, but it was also
more abstract than the specific original word-
ing, thus making it impossible to judge if
they actually changed their minds or were
merely placating their critics.
This problem is not as troublesome once
the metaphors are exchanged. In genre
theory,5 which is the institutional theory of lit-
erature, the sources of homogeneity and het-
erogeneity are the same. The result may veer
to one side or another temporarily and locally;
what is more, because no ‘thermostats’ are
fitted, the imbalance can lead to the extinction
of a genre or to its temporary dominance over
others. No predictions of the kind ‘If A then
B ... ’can or need be made. But an under-
standing of the dynamics can be attempted,
because the coercive pressures or attempts
to use power to establish the superiority
 SOME REFLECTIONS ON INSTITUTIONAL THEORY(IES)
of one genre over another invariably produce
counter-narratives and subversive genres.
Thus one could claim that the Académie
Française promoted freedom of expression in
French art; that the increasing control of
positivism revealed the strength of
symbolist approaches; and that the bureau-
cratic orders of central administrations
produce bursts of creative avoidance activities.
The emergence of institutions is always rife
with paradoxes.
Mimetic processes become much more
complex, as well, when interpreted in terms
of fashion (a social phenomenon) rather than
individual imitation (Czarniawska, 2005).
The concept of fashion, conceived in the way
Tarde (1890/1962) and Simmel (1904/1973)
understood it, combines a striving to conform
with a striving to be original. The municipal-
ities espousing yet more reforms and changes
are afraid of being left alone (‘What if
everybody else reforms?’) and are proud of
being avant-garde (‘We were there before
anybody else’).
Finally, normative (professional) pressures
may be the most ambiguous of all. On the
other hand they were described in DiMaggio
and Powell (1983) as idealistic and at vari-
ance with social realities; and on the other, as
hierarchical, authoritarian, and akin to coer-
cive pressures. The narrative version of insti-
tutionalism needs no more than corroborate
this ambiguity. Within professional environ-
ments, there is always a simultaneous pres-
sure to adhere to tradition and to rebel
against it, to create new traditions and to
follow the conventional way of doing things.
Additionally, genre theory reveals interplay
between intentionality and field forces that is
hardly visible in the ‘institutional isomor-
phism’ version of events. Literary works can
be and are consciously constructed, but it
does not mean that the intentions of the read-
ers will ever approximate the intentions of the
authors or that a text can be intentionally cre-
ated as an exemplar – a beginning of a new
genre ordered by fiat. Once a pattern begins
to emerge, actors try to appropriate it, give
it a name, translate it for their own needs,
777
construct their identity around it – authorize
it, as it were. Once again, the reaction of the
readers – or the spectators – may be accept-
ance or rejection.
All these contradictions may be connected
with a paradox that seems to be inherent in
institutionalism, at least in its constructivist
version (Sismondo, 1993 used Berger and
Luckmann, 1966 as an example). On the one
hand, the construction of institutions implies
and demands a proactive vision of human
actors busying themselves with plotting,
performing, and accounting for what they do,
and thus producing reality as they know
it. On the other hand, the notion of institu-
tions suggests accretion, a passive process
under no one’s control – something that just
happens.
For Sismondo, this is a historical accident,
a somewhat unreflective combination of two
different thought traditions, which is obvi-
ously ‘wrong.’ There is no point in insisting
that it be corrected, however. For me, it opens
a vast area of possibilities, because and not in
spite of its lack of coherence. Is not a fuller,
richer picture of knowledge and reality being
created by this emphasis on a combination of
plots and intentions, which produces unin-
tentional but powerful changes? According
to this reading, even institutionalism and the
rational model can complement each other.
The rational model promotes change and the
illusion of controllability, which, according
to Luhmann (1986), is necessary to keep the
system going. The institutional response is
that the change happens only within the
frames permitted by the institutional thought
structure; and observations confirm this
view, insofar as it concerns planned change.
But the changes are many, and truly radical
ones are, by definition, unpredictable;
although it could be claimed that the proba-
bility of such radical changes would be
smaller if all planned change ceased to exist.
‘Looking at the system from the outside’ is
a metaphorical, paradoxical attempt in
Escherian spirit, as Luhmann repeatedly
stated in his writings. Thus it does not make
sense, from this imaginary travel to the
778 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
outside, to make ‘predictions’ or to form
‘recommendations for action,’ which can
be used ‘inside.’ ‘It is not the task of an exter-
nal observer to de-paradoxize the system
and describe it in a way that is suitable
for multi-level logical analysis’ (Luhmann,
1986: 179). What our imaginary ‘vision
from outside’ says is that the system survives,
thanks to its fictions – its illusions of
selection, rational choice, and intentionality –
combined with complexity and with
the knowledge of closeness, repetition, and
self-reflection.
Pointing out the ‘iron cage’ of institutions,
DiMaggio and Powell failed to see what
Luhmann has been emphasizing all along. Of
course it is an iron cage, but it ‘functions’
well, as long as people inside believe that
they are free. ‘The autopoiesis does not stop
in [the] face of logical contradictions: it
jumps, provided that possibilities of further
communication are close enough at hand’
(Luhmann, 1986: 180). It would be unfair to
claim that the new institutionalists are
unaware of this paradox, but many try to
deparadoxize their theory – an unnecessary
feat, given that a theory describing paradoxes
does not have to be paradoxical itself.
Neither does it have to exclude paradoxes at
all costs; in general, it does not have to imi-
tate the system it describes. Such an ‘anthro-
pological approach toward social ideas,’ as
Thurman Arnold (1935: 30) called it, is not
supposed to lead to ‘a logically formulated
set of principles’ (1935: 30), which
some new institutionalists try to develop.
Neither should it demand that the system it
observes should stop producing such princi-
ples: ‘It is the system under examination
which can no more help producing principles
than a hen can keep from laying eggs’
(Arnold, 1935: 30).
Karl E. Weick’s (1979) description of the
world of organizations was similar to
Arnold’s, with the added mechanism of
‘loose coupling,’ which permitted different
and even contradictory subsystems to coexist
peacefully under the same label and under
the same organizational roof. Brunsson
(1985, 1989), inspired by Arnold (1935)
and by Meyer and Rowan (1977), who
spoke about rationalist decision façades
and action-oriented practices, postulated
hypocrisy as a joining mechanism; March
and Olsen (1989) spoke of ‘healthy
hypocrisy.’
Many new institutionalist works, however,
steer away from such solutions and return to
Arnold’s dilemma, doing precisely what, in
his opinion, made no sense: formulating their
observations about the paradoxical nature of
the system in a language of one of the sub-
systems – the one that forbids paradoxicality.
Perhaps this need to formalize and formulate
predictions is connected with the trap of
institution-maintenance that lies in wait for
every institutionalist. Genres and other insti-
tutions presuppose permanence (an institu-
tion is a practice that lasts) and difference (an
institution must be different and differen-
tiable from other institutions). Such a state-
ment is apparently in perfect congruence
with the stationary assumptions of the new
institutionalism.
DON’T GO TOO FAR; TURN AROUND
AND TAKE A LOOK
As long as a genre or an institution is used
properly – for classification – this is not a
problem. ‘Any public tends to classify what it
receives and to receive it through a classifica-
tion of everything that it has received before’
(Lejeune, 1989: 147). This is what the con-
cept of the ‘institutional thought structure’
(Warren, Rose, and Bergunder, 1974) was all
about.
The possible transgressions are two. One
is to attempt to construct a complete theory,
as Northrop Frye (1957/1990) tried within
genre theory. Lejeune’s (1989: 152) critique
was firm: ‘To elaborate “a theory of genres”
is to try to formulate a synthesis in the absolute
by making use of concepts that make
sense only in the historical field’ (Lejeune,
1989: 152). As mentioned, this danger has
 SOME REFLECTIONS ON INSTITUTIONAL THEORY(IES)
been avoided, at least in DiMaggio and
Powell’s tolerant presentations of a variety of
institutional theories.
The other risk is that the phenomenon in
the focus of reflection – the unproblematic
(because it is institutionalized) use of classi-
ficatory devices – re-occurs within the reflec-
tion itself. One solution to this problem is to
place oneself and one’s analysis in the closed
system that is being depicted, as the genre
analysts often do. The narrative angle makes
self-reflection easier, in view of the observa-
tion that theoretical narratives are produced
within the same institutional thought struc-
ture as the narratives of the field. Seeing
one’s theory as a narrative among many (or,
in case of institutional theory, a genre among
others) can help to locate it institutionally.
Otherwise, the theoreticians are doomed to
including a blind spot in their theory, which
covers their own position in it.
Lack of self-reflection is not a trait of the
new institutionalism alone. The ‘old’ institu-
tionalists also took the notion of one institu-
tion for granted: the institution of social
science research. Even sociologists of knowl-
edge, such as Berger and Luckmann,
assumed that their task was to study everyone
else – that sociology itself can be studied
only by philosophy (Berger and Luckmann,
1966). One could argue, however, that the
‘old’ institutionalism was born in harmony
with its institutional environment, in the sense
that its ideas blended well into the main-
stream of its time. Not so the new institution-
alism, somewhat in opposition to the present
mainstream in social sciences, and appearing
to try to appease the institutional core by sac-
rificing its traditional methods, which were
close to those of anthropology. The result,
however, seems sometimes not so much para-
doxical as confused. Many studies report
straightforward statistical analyses. Surely it
is the task of an institutionalist to explore the
way statistics are built and used, and not to
take them as ‘facts’,6 ‘revealing regularities’?
Many contributions contain predictions and
formalizations. How can this be reconciled
with the pragmatist-constructivist assumptions
779
behind the institutionalist ideas? Why should
one attempt to formalize a world undergoing
construction?
There is always the possibility of alternat-
ing between the position of an observer and
that of the actor – in this case as observers of
and actors in social science. Thus I end as I
began: with a plea for an institutional
account of institutional theory.
NOTES
1 Roine Johansson limits this development to
Sweden (Johansson, 2002).
2 Paul DiMaggio’s (1988) view of the temporality
of every institutional order is close to this idea, but is
more conflict oriented.
3 According to Ernest Gellner, on the occasion
of the 70th anniversary of the foundation of LSE,
Oakeshott and Gellner quarreled, Gellner arguing
that 70 years is long enough to speak of the estab-
lishment of an institution, and Oakeshott arguing
that it requires at least 200 years (Gellner, 1980). I am
on Oakeshott’s side, as the recent changes in Russia
have demonstrated; 70 years is not enough to
change an institutional order.
4 The very distinction between ‘physical’ and ‘cul-
tural’ metaphors is tenuous. As mentioned, Tarde
saw diffusion as a cultural process, whereas biolo-
gists speak of both diffusion (a movement of a sub-
stance from an area of high concentration to an area
of lower concentration) and translation (of messen-
ger RNA in a bacterium E.coli, for example). The term
‘translation’, as used in the sociology of translation,
is also nonlinguistic (Steve Brown, 2002).
5 Genres are sets of rules and conventions gov-
erning expectations about the length and composi-
tional structure of communicative acts, but also ways
of conceptualizing reality, forms of seeing and inter-
preting particular aspects of the world. I am referring
here to dynamic genre theories, such as those devel-
oped by Bakhtin (1979/2000) and Bruss (1982).
6 ‘Facts, as telescopes and wigs for gentlemen,
were a seventeenth century invention’ (MacIntyre,
1988:357).
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Been There, Done That, Moving On:
Reflections on Institutional
Theory’s Continuing Evolution
In the literature of Sociology, one seldom
finds references today to terms like grand vs
middle range theory, structural-functional-
ism, and social Darwinism. But, for more
than two decades, debates over these terms
raged throughout the discipline – until the
field moved on – having arrived at some con-
ceptual agreements and letting the rest drift
away. The recent history of Institutional
Theory repeats conflicts over many of the
same issues and themes. I am pleased to say
we have also followed suit in resolving these
by having the various sides’ framing of issues
converge some, and otherwise, moving on.
Since this chapter reflects on some of these
paradigm conflicts as I saw them, much of the
essay is historical, written in the past tense.
The good news is I am pleased to celebrate
the end of an era of tough conflicts over
defining Institutional Theory, and participate
in its future development.
33
Paul Hirsch
FROM POLITICS TO CULTURE
My introduction to the term ‘institution’
came from Parsons’ classic (1956) essay on
three levels of analysis in the study of organ-
izations, published in the first issues of
Administrative Science Quarterly. In this
framework, work gets done at the firm’s1
technical level and is coordinated at its
managerial level. Laws and regulations are
created outside the firms’ boundaries, at the
institutional level, and enforced in the mar-
kets and external environments in which
these organizations operate. Parsons’ concep-
tion of this process was two-way, with each
side mutually influencing the other. Going
way beyond a closed system conception of
organization, his ‘Institutional’ level encom-
passed a political world in which lobbyists,
trade associations and others with direct
interests met with authorities to negotiate
784 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
over rules that would govern their firms’
behavior. In Parsons’ terms:
Subject to the overall control of an institutionalized
value system in the society and its subsystems, the
central phenomenon of organizations is the mobi-
lization of power for the attainment of the goals of
the organization. The value system legitimizes the
organization’s goal, but it is only through power
that its achievement can be made effective. (1956:
225, italics in the original)
Parsons’ framework, and the subsequent
influence of the open systems perspective
had a large impact on the developing organi-
zational field. The value (and possibility) of
analytically deriving an organization’s
behavior from its external environment was
new (Hirsch, 1975a).
Also exciting was the opportunity this pro-
vided to examine how, in turn, the organiza-
tion could work to change a regulation or law
from being, in James Thompson’s terms
(1967: 24), an unwelcome ‘constraint’ to a
more manageable ‘contingency’ and, finally,
a manipulable ‘variable.’ Two notable conse-
quences of so analyzing organizations were
developing strategies to ‘beat’ the market,
and having a unit of analysis between the
individual and society that could ‘act.’
Organizations were seldom conceived as
such independent units in economics (in
which firms were ‘typical,’ not distinctive),
or sociology (which conceived organizations
as tools implementing agendas set exter-
nally). Several of the fault lines that
would later develop between what DiMaggio
and Powell (1991) framed as ‘old’ and ‘new’
institutionalism trace to conflicting interpre-
tations which subsequently developed
around such questions as: how open to influ-
ence from below are open systems?; how
much influence (if any) can managers exert
in constructing their organizations’ environ-
ments?; and, is the appropriate unit of
analysis for organizational studies the
organization, or the image and category of
organization it is presumed to fit?
At this time (mid-1970s), the term ‘institu-
tion’ was not coupled with the term ‘theory.’
Rather, it implied a place at which political
action occurred and change was possible.
As Stinchcombe (1997: 2) put it: ‘Institutions
were created by purposive people in legis-
latures and international unions, and in
pamphlets of business ideologists.’
Of course, the action’s result could well be
to reinforce existing rules – but this remained
a variable, with outcomes often uncertain.
For example, my article, ‘Organiza-
tional Effectiveness and the Institutional
Environment,’ published in ASQ (1975b)
utilized the concept ‘institutional’ to track
how U.S. patent law and State regulations
about prescribing brand-name drugs were
influenced by the pharmaceutical industry’s
lobbying.2
As a student of culture as well at the time
(Hirsch, 1972), I found the two concepts –
culture (on the one hand) and institution (on
the other) did not overlap and were not linked
in the field. For sociological articles address-
ing culture at that time, it was deemed neces-
sary to connect the topic addressed to social
structural issues (e.g., economic concentra-
tion or audience demograpics), rather than
focus on (just) its narrative or aesthetic con-
tent, imagery or other nonmaterial features.
The ‘Production of Culture’ school (Peterson
and Berger, 1975; Hirsch and DiMaggio,
1977) successfully extended the dominant
studies of social structure to cultural issues
and sites; the later ‘cultural turn,’ which
partly reordered and reversed these priorities
in subfields across social sciences, had not
occurred yet (Peterson and Anand, 2004;
Hirsch and Fiss, 2000).
REFRAMING THE CONCEPT OF
INSTITUTION: FROM ACTION TO
ICON – A TRAIN LEAVES THE STATION
I visited Stanford in 1975. Dick Scott was
on leave and I was honored and pleased
to be asked to teach the Sociology of
Organizations class. It was a wonderful year,
during which John Meyer and Brian Rowan
 REFLECTIONS ON INSTITUTIONAL THEORY’S CONTINUING EVOLUTION
were finishing what became their classic arti-
cle (1977) on ‘Institutionalized Organi-
zations: Formal Structure as Myth and
Ceremony.’ It proclaimed an explicit re-entry
of a cultural framing to explain organiza-
tional actions in the face of environmental
demands. The multiple ways in which Meyer
and Rowan also showed organizations could
‘game’ the system to attain legitimacy were
as clear and impressive as their point that to
gain legitimacy organizations needed to
respond to signals from their environments,
or appear to do so. My sense at the time was
their contribution was compatible with, and
added to, the ways in which Thompson
(1967) had suggested organizations could
gain from and exert a reciprocal influence on
their environments.
In the years which followed, writers on
institutional theory rightly credited and
praised Meyer and Rowan’s formulation for
being among the first to shift the field’s atten-
tion away from the technical sides of measur-
able performance, focusing more on the
importance of organizations’ conformity to
the appearance and symbols defined as
legitimate by their external evaluators.
Interestingly, these two sides of their formu-
lation both contributed to what later became
called ‘old’ and ‘new’ institutionalism. On
one hand, its discussion of the symbolic envi-
ronment’s power to confer legitimacy had a
strong influence on DiMaggio and Powell’s
(1983) initial presentation of the powerful
role of legitimacy in rewarding conformity
through isomorphism; this one-way conferral
of status in exchange for conformity was an
important step towards their subsequent for-
mulation of ‘new institutionalism’ (1991).
On the other hand, Meyer and Rowan’s enu-
meration of ways organizations (through
myth and ceremony) can reap rewards by
only appearing to be (but not actually) con-
forming to that environment’s signals is more
consistent with what became ‘old’ institu-
tionalism. These were well documented in
(Marshall) Meyer and Zucker’s (1989) study
of Permanently Failing Organizations, for
example. In his (otherwise critical) review of
785
John Meyer et al.’s volume, Organizational
Environments: Ritual and Rationality (1983),
Perrow (1985) commended what he
described as a resulting contingency-like
framework, exhibiting a continuum in which
the assessment of some (mainly industrial)
organizations was based on production and
efficiency standards, while greater reliance
on myth and ceremony characterized assess-
ments of (mainly) government agencies and
non-profit organizations. At this time, both
conceptions of organizations and measures
were included and distinguished in the grow-
ing institutional framework.3
Meyer’s innovative approach was
extended and applied in multiple projects
with Scott. The term ‘institutional’ was
added to what in sociology had more tradi-
tionally been attributed to culture’s and
symbols’ influence on people and organi-
zations. Cognitive framing rather than a
focus on socialization also displaced more
conventional references to ‘values’ and
‘norms.’ Before long, what we now know as
‘Institutional Theory’ was launched, with
legitimacy as the currency for success, and
its conferral uni-directional (top down). This
latter focus, emphasizing the persistence of
‘taken for granted’ rules to conform to,
brought on comparisons with population
ecology – for which environments also
‘dominate or overpower organizations’
(Aldrich, 2006: 41) and similarly ‘treat
organizations as a population within an orga-
nizational field’ (Greenwood and Hinings,
1997: 1026). Brint and Karabel (1991: 355)
also noted its contributions to the study of
institutional forms and functioning, while
also criticizing the absence of interest in their
origins and transformations.4 Interestingly,
the theory’s interpretation of decoupling as a
deliberate strategy to avoid following rules
also brought on alternative formulations
proposing the same behaviors to instead
be responses to confusion over multiple
signals and rule ambiguity (Weick, 1995;
Martin, 1992).
The theoretical ascent of culture, as estab-
lishing the appropriate behaviors to follow,
786 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
both challenged and reversed earlier over-
statements by structuralists, which (para-
phrasing Marx) had framed culture as
insignificant ‘superstructure.’ The sides were
now reversed.5 In this developing version,
Institutional Theory effectively ignored the
‘flipside’ earlier allowed by Meyer and
Rowan (1977), and Meyer, Scott, et al.
(1983) to interact with their environments
over determining what rules must be fol-
lowed. This understanding of the term ‘insti-
tutional’ as political in nature, which I (and
others) had utilized (and still also see) as the
analytical level where the process of change
and bargaining over rules occurs, was now
reframed more as an untouchable icon,
whose signals are set and rules enforced and
not subject to challenge.
For the discipline of Sociology, this
revived echoes of a long-standing debate
between a focus on stability (‘romancing
the norm’) and proponents of change.
Max Weber, along with noting the power
and great efficiency of rule-following
bureaucracies, had also worried about how
the rules they enforce can be socially
harmful and in need of change. At the time
of the discipline’s arrival in the U.S., its
proponents divided between advocates of
social Darwinism vs. those seeking to reform
poverty and injustice. The dispute between
‘old’ vs ‘new’ institutionalism recalled
earlier competing agendas – to study
deviance vs. dominance, peripheries vs.
centers, exotic vs. normal activities, as well
as middle range vs. functionalist formula-
tions, and (statistically) variation on scatter-
plots vs. a greater focus of regression lines.
A critique of new institutionalism as more
‘sociology without villains’ was not much of
a departure from these earlier intellectual
debates.
BATTLE OF THE COASTS
For the organizational field, this debate also
took on what Howard Aldrich (2007) noted
as a ‘battle of the coasts.’ After
DiMaggio and Powell (1991) published
their famous ideal type dichotomy of the
‘old’ and ‘new’ institutional schools, it
became clear from departmental composi-
tion and hirings that the more political ver-
sion of what was now called ‘old’
institutional theory remained rooted in the
east, while advocates of the ‘new’ institu-
tional school were based primarily
at Stanford and on the west coast. The
‘new’ institutional framework, joined
by population ecology (also rooted
on the west coast, mainly Berkeley),
discounted the idea that organiza-
tions can or should adapt to or impact
their surroundings (Greenwood and
Hinings, 1996). Published articles work-
ing from this perspective came dispropor-
tionately from scholars based in (and
graduating from) departments on the
west coast. (Ironically, if each coast was
disproportionately tied to one or the
other of these poles, departments in the mid-
west [e.g., at the Big Ten schools] were
generally learning from both and not
taking sides.)
A pictorial version of this review,
coupled with the happy observation that the
two poles are no longer so far apart, appears
in Table 33.1 of the Appendix.
RESOLUTION AND
BRIGHT FUTURE
In the midst of this contention, I was hon-
ored to be selected to assess the field, as
the Academy of Management OMT
Division’s Distinguished Scholar for 1998.
In this talk (‘Process Detective: A Role
for the Organization Researcher’), I had
a chance to reflect on how the Open Systems
revolution had turned out so far. I noted the
irony that it expanded the explanatory field to
which we turn to explain organizational out-
comes, but was failing to provide adequate
 REFLECTIONS ON INSTITUTIONAL THEORY’S CONTINUING EVOLUTION 787

explanations for how these unfolded. My We look forward to the reconciliation of

concern was that:
we now risk a closed system model of the environ-
ment. It calls its own shots, does not conform to
models of what makes it change, doesn’t seem to
be dependent organizationally on many input or
output analogues. We placed the environment in
control, no questions asked. At this broader
level, formalisms and scientific management
can be redefined as re-engineering or process con-
trols; informal relations can be reframed as net-
work studies. We have reconstituted a closed
system at either level. So, it’s probably time for a
new theory to come along and put more interac-
tion and enactment back into the theoretical
equation.
An easier solution became apparent when
Michael Lounsbury and I imagined combin-
ing the best of ‘old’ and ‘new’ institutional
theories. In fact, it seemed clear these ideal
types could not go much farther before each
needed to incorporate and ‘borrow’ elements
associated with the other. We proposed this
as the resolution for ‘Ending the Family
Quarrel’ (Hirsch and Lounsbury, 1997),
suggesting that more history and politics be
permitted entry into the ‘new’ and more sym-
bols and cultural framing be included the
‘old.’ We concluded these suggestions by
stating:
the old and new institutional perspectives. ... There
is so much of value and interest in each, we do
not see how they can remain empirically
and intellectually separate for very long. (1997:
417)
Happily (though the article was discour-
aged by an ASQ editor at the time), the field
has subsequently moved in this direction.
Similarly, I suggested that the research
in the three pillars of Scott’s (1995) typology
of institutional perspectives be combined
or collapsed, to encourage more options
for locating ‘additional complementarities
and alliances across them’ (Hirsch, 1997:
1721).
It is heartening so many of these visions
have been realized. The chapters in this
handbook attest to it, and their indifference
to the framings of the ‘old’ vs. ‘new’ debate
can help make it a thing of the past. We
now benefit from the larger inventory of
sophisticated concepts and methodological
tools to conduct our studies. As suggested at
the start of the essay, we have been there and
are done with the preliminaries. The prospect
of much fascinating research lies ahead. Now,
to move on and continue the Institutional
journey!

APPENDIX

Table 33.1 In the kingdom of the institutional

Hegemony of New York Principality Princes Find independence (out west) Happy Ending (2007)
● Merton>Parsons ● Meyer ‘Old’ and ‘New’ adjectives dropped
● Selznick ● Powell & DiMaggio from use. e.g., sample
● Perrow ● Scott characters in Handbook:
● Granovetter ● Zucker ● Schneiberg et al. reframe their meaning;

● Palmer ● Ocasio and Thornton

find compatibility logic

Currency: Currency: Currency:
Muckraking Conformity – with persistence and Peace and curiosity
‘Man Bites Dog’ legitimacy reframed “No bites at all”
Variation and scatterplots (isomorphism; regression to mean)
788 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
NOTES
1 The terms ‘organization’ and ‘firm’ are being
used here interchangeably.
2 If replicated today, one would learn that the
number of lobbyists employed by this still powerful
industry in 2007 was more than double the number
of U.S. Senators and congressmen (CBS News, Sixty
Minutes 2007).
3 Meyer’s influence in reviving culture as an
important part of the sociological landscape in which
to conduct research also contributed to the explosion
of studies on ‘organizational culture.’ His student,
Terence Deal co-authored one of the first (and best-
selling) texts in this area (Deal and Kennedy, 1982).
4 Interestingly, DiMaggio and Powell (1991: 12),
who included Brint and Karabel’s essay in the same
volume, also agreed that this version of institutional
theory ‘usually downplayed conflicts of interest
within and between organizations.’
5 I have consistently insisted both be included in
our studies (cf. Hirsch, 1986). In one Author’s Bio
(Hirsch, 1997), I wrote that I ‘have straddled the
boundaries dividing culture and social structure for
two decades, usually seeking more balance by taking
the side of whichever one seems to be getting the
worst of it from the other.’
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Brint, S. & Karabel, K. (1991). Institutional ori-
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Reflections on Institutional
Theories of Organizations
Contemporary institutional theorizing in the
field of organizations dates back thirty-odd
years. This particularly describes what are
called new or neo-institutionalisms. These
terms evoke contrasts with earlier theories of
the embeddedness of organizations in social
and cultural contexts, now retrospectively
called the ‘old institutionalism’ (Hirsch &
Lounsbury, 1997; Stinchcombe, 1997). They
went through a period of inattention, so that
when institutional thinking came back in
force after the 1960s, it seemed quite new.
Institutional theories, as they emerged in
the 1970s, received much attention in the
field, along with other lines of thought
emphasizing the dependence of modern
organizations on their environments. Perhaps
surprisingly, they continue to receive atten-
tion, and seem to retain substantial measures
of vigor. One secondary aim, here, is to
explain why.
I primarily review the status and prospects
of the principal themes of institutional theory.
I concentrate on sociological institutionalism,
as capturing core ideas in their most dramatic
form, rather than the limited arguments
emphasized in economics or political science.
34
John W. Meyer
And within sociological versions, I concen-
trate on phenomenological theories. These
reflect my own interests, are continuing loci
of research creativity, and contrast most
sharply with other lines of social scientific
theorizing about organizations. In practice,
‘organizations’ tends to be both a research
field, and a realist ideology about modern
society: phenomenological thinking steps
back from that commitment, and is useful in
analyzing, for example, why so much formal
organization exists in the modern world
(Drori, Meyer, & Hwang, 2006).
BACKGROUND
Throughout most of the post-Enlightenment
history of the social sciences, notions that
human activity is highly embedded in institu-
tional contexts were central. Individuals were
seen as creatures of habit (Camic, 1986),
groups as controlled by customs (famously,
Bagehot’s cake of custom or Spencer’s folk-
ways and mores), and societies as organized
around culture.
 REFLECTIONS ON INSTITUTIONAL THEORIES OF ORGANIZATIONS
The nature of the institutions and their con-
trols over activity, in social scientific thinking,
was never clear and consensual. Theories
ranged from economic to political to
religious. And they variously emphasized
more cultural forms of control or more
organizational ones. Then, as now, anything
beyond the behavior of the people under study
could be seen as representing a controlling
institutionalized pattern (a strikingly clear def-
initional discussion is in Jepperson, 1991).
Over the long history of social scientific
thinking through the mid-twentieth century,
institutional theories grew and improved.
Sophisticated syntheses like Parsons’ were pro-
duced, with many variations on broad evolu-
tionary schemes and typologies, as high
Modernity progressed. But they came into
dialectical conflict with another aspect of the
same Modernity. As ‘men’ came to believe they
understood the institutional bases of human
activity, they also came to believe they could
rise above, and control, them – no longer sub-
ject to, but playing the parts of, the now-dead
cultural gods. Embeddedness in culture and
history was a property of the superstitious past,
over which the Moderns had triumphed. So
institutional thinking could survive in anthro-
pology and about primitive societies (including
earlier Western history), but only tenuously in
the social sciences of Modernity (Meyer, 1988).
In short, the old institutionalisms were
driven into marginality by the rise of (often
policy-oriented and scientistic – see Toulmin,
1990) conceptions of social life as made up
of purposive, bounded, fairly rational, and
rather free actors. Society was discovered,
headed by the sovereign state as its central
actor, freed by the constitution of Westphalia.
The human person as individual actor was
discovered, unleashed by markets, democ-
racy, property rights, and religious freedom.
And rationalized social life, made up of
bureaucracies essentially delegated from the
state (as in Weber or Fayol) or associations
built up by individual actors (as in Barnard),
was discovered and celebrated.
In the new schemes, built around notions
of society as made up of empowered actors,
791
older institutional theories tended to crum-
ble. Studies of persons no longer attended to
notions of habits (Camic, 1986), and con-
cepts of culture and custom as driving forces
receded. If the old institutions remained, they
remained as dispositional properties of the
actors involved – tastes and values of individ-
uals, core values of states and societies.
The key concept in the new system was the
notion of the ‘actor’ – variously, individual
persons, national states, and the organiza-
tions created by persons and states. Society
was produced by these powerful entities. It
was made up exclusively of actors, and even
the rapidly disappearing peasants could be
analyzed as individual actors. Social change
was a product of such actors: thus the contin-
uing use of an individualistic version of
Weber’s Protestant Ethic thesis as a proof
text for proper social analysis (e.g., Coleman,
1986; Jepperson & Meyer, 2007). And all
this had a normative cast – social institutions
that restricted the development and choices
of real social actors could be seen as ineffi-
cient at the least, and perhaps as destructive
of freedom and progress.
The new models remain in force, and it is
now conventional in social science publica-
tions to refer to ‘actors’ rather than people and
groups. But over time there have been doubts
about models of society and the world as
made up of interested actors, and only of
actors. Too many studies of individual persons
showed astounding levels of embedded non-
actorhood in what were supposed to be politi-
cal, economic, and cultural choices.
A whole literature on organization in actual
social life showed the overwhelming impor-
tance of uncertainty in organizational
(non)decisions (Cyert & March, 1992) and of
the informal resolutions involved in practice
(Dalton, 1959; and many others): formalistic
or technicist analyses (e.g. Perrow, 1970; Blau
& Shoenherr, 1971) seemed much too limited.
And notions of rational sovereign nation-state
action as driving development did not stand up
against the realities of chaotic Third World
nation-states, and the surrealities of the First
and Second Worlds’ Cold War.
792 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
So, since the 1970s, in every social science
field except anthropology (where older institu-
tionalisms had never receded), ‘new’ institu-
tionalist theorizing appeared, with models
again envisioning people and groups as
embedded in larger structures and cultures of
one sort or another (See Jepperson 2002 for
a review). There have been as many different
varieties as in the ‘old’ institutionalisms, but
they all have had one main element in
common. They all have come to terms with
one or another version of the idea that society
is made up of interested, purposive, and often
rational actors.
If the old institutionalisms had seen people
and groups as rather naturally embedded in
broad cultural and structural contexts, the new
institutionalisms incorporate a tension in the
conceptualized actor–environment relation.
This is often seen as a stress between structure
(i.e., the environment) and agency or actorhood
(see e.g., Giddens, 1984; or Sewell, 1992), in
replication of the debates in the old institution-
alism about free will and determinism.
The new institutionalisms see the social
environment as affecting the behaviors and
practices and ideas of people and groups now
conceived as bounded, purposive and sover-
eign actors. Many different lines of thought
are involved, varying in their conception of
what an actor is, and what properties of
which environments are relevant.
TYPES OF INSTITUTIONAL THEORY
Most institutional theories see local actors –
whether individuals, organizations, or
national states – as affected by institutions
built up in much wider environments.
Individuals and organizations are affected by
societal institutions, and national-states by a
world society. In this chapter, we focus on
these lines of theory.
But it can be noted that some other lines of
thought treat modern actors as affected by the
institutionalization built into their own histo-
ries. Older ideas about habit, custom, and cul-
ture are resurrected as theories of what is now
called ‘path dependence.’ So that individuals
or organizations, faced with a new problem,
use their accustomed older solutions whether
or not these ever worked or can reasonably be
expected to work (see the various essays by
March and his colleagues, 1988).
In the present essay, we leave aside this
line of institutional theory, and concentrate
only on lines of argument locating institu-
tionalized forces in wider environments than
the history of the actor itself. These tend to
fall on a broad continuum ranging from more
realist theories to more phenomenological
ones. After reviewing this range of argu-
ments, we turn to focus more intensively on
the phenomenological side of the spectrum,
which is of special interest here, the locus of
the most distinctive advances in the field, and
an important contribution to a field which
tends to merge theory and realist ideology in
ways that are often unexciting.
Realist institutionalisms
Some institutionalist lines of thought, arising
particularly in economics and political sci-
ence, retain very strong notions of society as
made up of bounded, purposive, sovereign,
and rational actors. In economics, these
might be individuals or organizations, oper-
ating in market-like environments. In politi-
cal science, they might be sovereign
national-states operating in an almost anar-
chic environment. Institutionalism, in such
schemes, involves the idea that some funda-
mental institutional principle must be in
place before systems of such actors can
effectively operate. The classic core principle
required in economic versions is property
rights (North & Thomas, 1973). In interna-
tional relations theory it is the principle of
nation-state sovereignty (Krasner, 1999).
Once the core principle is in place, sys-
tems of actors freed from further institutional
influences are thought to function stably and
effectively over time. Indeed, further institu-
tional interventions in the market or interna-
tional polity are thought, in extreme versions
 REFLECTIONS ON INSTITUTIONAL THEORIES OF ORGANIZATIONS
of these traditions, to be counter-productive
disturbances of rationality. There is a ten-
dency to see the situation as one of punctu-
ated equilibrium. Collective history operates
briefly, creating the crucial change, and then
stable equilibria ensue. So there are accounts
of the unique circumstances producing the
construction of property rights in Western
history. And there are discussions of the sim-
ilarly unique circumstances producing the
magic of Westphalia, thought to undergird
the rise to world dominance of the Western
nation-state system.
Extreme realist institutionalism, thus,
retains very strong assumptions about the
capacities of actors, and very limited pictures
of the institutional environment. The envi-
ronment really contains only one narrow
institutional rule – and in most versions it is
a rule created by the actors themselves,
whose existence and character are seen as
entirely prior to the institutional regime.
Over time, realist institutionalism has
tended to become a good deal less extreme,
and more realistic (see e.g., North, 1981). To
property rights, the economists add a variety of
other important institutions needed to make the
modern system go (Jepperson & Meyer, 2007).
A variety of institutions must reproduce and
socialize the population, for instance, and a
knowledge system is required to encourage
technical improvements (Mokyr, 1992). And
perhaps even some cultural supports for entre-
preneurship are needed (Landes, 1998).
Similarly, realist political scientists add institu-
tional elements necessary to make the world
political system work: guarantees of agree-
ments, and trust, for example. In political sci-
ence realism, as well as in economics,
however, the institutions thought to be required
are also mainly thought to be products of the
interested activity of the basic actors involved.
Compromises with realism
Moving away from more extreme realist
thinking, much modern social science is built
up around more complex pictures of
793
the institutional context of actorhood, and a
conception of the modern actor as rather more
penetrable. The institutions have cultural or
discursive dimensions, and also structural or
organizational ones. The key term describing
institutionalized culture, here, is ‘norm,’ espe-
cially common in political science (see for
extended examples, Katzenstein, 1996). The
key notions of institutionalized organization,
especially utilized in sociology, are ‘relation’
or ‘network’ (Granovetter, 1985).
A norm is a rule with some degree of bind-
ing authority over actors – for instance, in
international relations, the principle that a state
should not kill the diplomats representing
other states; or the proscription of chemical
weapons in war. In the most realist theories, a
norm is created by the actors involved, and has
binding power over an actor only inasmuch as
that actor continues to support it. In less realist
versions, norms may have been created by
forces in the past, and may have binding power
whether or not present actors support them. In
these latter accounts, norms are internalized by
actors through some sort of socialization
process: thus, in a compromised realism,
actors are partly creatures of the rules, not only
creators of them.
Similarly, a network relation between
actors is a simple form of organizational
institutionalization. Such relations are
thought to constrain actors, as well as pro-
vide opportunities for their activities. In the
most realist versions, actors create their net-
works: in less realist models, the networks
are more institutionalized, have prior
histories and external determinants and thus
generate considerable path dependence.
Sociological institutionalism I:
social organizational versions
Moving further away from realist models, we
come to some core ideas of modern sociolog-
ical institutionalism (see DiMaggio & Powell,
1983; Powell & DiMaggio, 1991; Scott, 2001;
Jepperson, 2002; Hasse & Kruecken, 2005).
Here, actors are substantially empowered and
794 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
controlled by institutional contexts, and these
contexts go far beyond a few norms or net-
work structures. Further, these contexts are by
no means simply constructions built up by the
contemporary actors themselves, but rather
are likely to have prior and exogenous histori-
cal origins.
Institutions, in these conceptions, are
packages or programs of an expanded sort.
‘Regimes’ is a term employed in political sci-
ence for the idea – organizational packages
infused with cultural meaning (often from
professions as epistemic communities).
So one can refer to a neo-liberal regime in the
contemporary world. Or an anti-trust pro-
gram in earlier America (Fligstein, 1990).
Sociologists capture this idea by referring to
societal sectors, or social fields, or arenas of
action. Institutions, in these senses, are com-
plex and often coherent mixtures of cultural
and organizational material.
Similarly, the institutions involved pene-
trate actors in multiple and complex ways,
ranging from more realist formats to more
phenomenological ones. DiMaggio and
Powell (1983) provide a list that is much uti-
lized (see Scott 2001, for a related one). On
the realist side, they argue that institutional
structures affect actors through what they
call ‘coercive’ processes, including nation-
state legal actions. On the middle ground,
they envision ‘normative’ controls of envi-
ronments over actors, emphasizing the influ-
ence of professionalized standards. And then,
moving to a more phenomenological per-
spective, they suppose that environments
create standards that actors adopt ‘mimeti-
cally,’ reflecting taken-for-granted standards.
At this point, actors are not really well-
bounded entities any more, but may be built
up of cultural and organizational materials
from their environments.
Sociological institutionalism II:
phenomenological versions
A key turning point in the rise of the new
institutionalism is the development of a
perspective in which the actors of modern
society are seen, not simply as influenced by
the wider environment, but as constructed in
and by it (see Jepperson, 2002 for a review).
Related ideas in political science are called
‘constructivism.’ Rationalized organizations
as actors are creatures of rationalized envi-
ronments (Meyer & Rowan, 1977; Meyer &
Scott, 1983; see also Zucker, 1977). The indi-
vidual as actor is a continually expanding
construction of modernity (Meyer, 1986, fol-
lowing on a long discussion in the literature,
including Berger, Berger, & Kellner, 1973).
The nation-state as actor is a construction of
a world polity (Meyer, 1980; Thomas,
Meyer, Ramirez, & Boli, 1987; Meyer, Boli,
Thomas, & Ramirez, 1997).
The concept of ‘actor’ in this scheme is far
removed from that envisioned in realist per-
spectives. The realists imagine that people are
really bounded and purposive and sovereign
actors, and that nation-states are too. And so
are the organizations deriving from these. The
sociological institutionalists, on the other
hand, suppose that actorhood is a role or iden-
tity, as in a theatrical world (Frank and Meyer
2002): individual actors, in this usage, have
socially conferred rights and responsibilities,
and socially conferred agency to represent
these (and other) interests (Meyer &
Jepperson, 2000). Actorhood, in this usage, is
scripted by institutional structures; and the
relation between actor and action is no longer
a simple causal one – both elements have
institutional scripts behind them, and their
relation has, causally speaking, strong ele-
ments of socially constructed tautology. That
is, the actor–action relation is a package, and
as people and groups enter into particular
forms of actorhood, the appropriate actions
come along and are not usefully to be seen as
choices and decisions. Institutional theories,
thus, do not depend on particularly elaborate
social psychological assumptions about
people or groups: almost any social psycho-
logical model is good enough to explain what
institutionalization has made socially obvious.
Thus, when a group of modern people
gather to assemble or change an organization,
 REFLECTIONS ON INSTITUTIONAL THEORIES OF ORGANIZATIONS
they do not do so from scratch. Everywhere,
there are models put in place by law, ideol-
ogy, culture, and a variety of organizational
constraints and opportunities. People are
likely to install these in the organization they
are building with little by way of thought or
decision: exotic psychological assumptions
are not required. There will be offices and
departments that were unknown a few
decades ago (CFO, or Chief Financial Officer;
HR, or Human Relations Department). Few
will spend time deciding to adopt these insti-
tutions, and thus perhaps the word ‘mimetic’
applies. But it is an imprecise word, in this con-
text, because the people adopting the new
structures will often be able to articulate
clearly the legitimating rationales for their
action, as if these were thought-out purposes.
The purposes come along with the enterprise.
As an illustration at the individual level,
any good student in a prestigious American
university ought to be able, almost instanta-
neously, to write some paragraphs about
‘why I decided to go to college.’ But on
inspection, it turns out that almost none of
these students actually decided to go to col-
lege, as they had never contemplated any
alternative. Going to college was taken for
granted. Indeed, any student who had spent
serious time deciding whether or not to go to
college would be very unlikely to have a
record enabling admission to a prestigious
one. Nevertheless, many researchers study-
ing college attendance formulate their task as
analyzing a ‘decision’ – a decision they prob-
ably never made, and their subjects probably
never made. A number of methodological
errors follow, and beset the research tradition
involved. Parallel errors characterize much
research in the field of organizations and
states: decision analyses of matters never in
fact decided. Mistakes of this sort routinely
follow from the established realist assump-
tions that human activity, more or less by
definition, follows from choices.
Sociological institutionalism of the phenom-
enological sort is not only furthest from real-
ism, but arises in some opposition to it. Realist
theory, it is argued, grossly understates the
795
extreme cultural dependence of modern organi-
zational structures. Thus, the institutionalists
emphasize that much modern social rationali-
zation has mythic functions encouraging the
formation of organizations and their compo-
nents. This sometimes leads to criticisms that
institutionalism is only about ‘symbols’ rather
than ‘realities,’ and institutionalist research
occasionally in fact makes this mistake. On the
other hand, the realists, ignoring the depend-
ence of modern organizational structure on the
rapidly-expanding myths of rationality, have
no serious explanation for the rise – in every
country, every social sector, and almost every
detailed social activity – of so much modern
organization itself (Drori et al., 2006).
Phenomenological ideas are by no means
incompatible with more realist ones – in
most situations, both can be true and often
are. Tensions arise because realist models
tend to be exclusionary and core modern ide-
ologies, undergirding polity, economy, cul-
ture, and society. They are normative models
as well as cognitive ones, and thus alternative
lines of thought are seen as in part normative
violations. Further, closed-system realist
models are often central to policy advice, and
this function is limited by more open-system
institutional theories.
The career of sociological
institutional theory
The phenomenological perspectives of socio-
logical institutionalism have prospered over
the last three decades. Before discussing why
this is so, we need to note why it should not
have been so.
The ideological absorption of
institutional ideas
Modern social science, following on modern
ideology, celebrates a social world made up
of strong actors, in the realist sense. Theory
and ideology give great emphasis to notions
of society as a product of such actors and
their purposes. Methods of social research,
and public data collection, build data on and
796 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
around these units, and define proper analyses
as focused on both their independence and
their purposive action. And normative ideolo-
gies infusing both research and public life
give much preference to treatments that take
individual persons (and also nation-states and
organizations) as highly interested and agen-
tic actors (Jepperson & Meyer, 2007).
More concretely, modern democratic
political systems rest, for their legitimacy, on
doctrines of free individual choice. If the
individuals and their choices are construc-
tions of the powers of the system itself, the
legitimacy of democracy tends to disappear.
Similarly, if choices of individuals and
organizations in markets are in fact ‘wired’
consequences of the market system, the legit-
imacy of the free economy is undercut. The
same points can be made about religious and
cultural choices in the nominally free society.
Thus, there are cultural tendencies in the
modern actor-centered society to celebrate
actors in a very realist sense: these tenden-
cies are very strong ideological currents in
the social sciences. Social science influence
over policy tends to depend on them
(Jepperson & Meyer, 2007).
Consider that much organizational research
and theory go on, worldwide, in schools of
business and education and public policy.
These schools are built on the notion that
organizational leaders are decision-makers,
and their main tasks are to train their students
to be such decision-makers. They are in no
position to emphasize that their students are,
or should be, drifting non-decision-making
followers of institutionalized currents. Scott
(2007), for instance, defends realist institu-
tional theory on precisely these grounds.
Thus, as new institutional forces are built
up in the modern system, the system
itself tends to absorb them in expanded theo-
ries of actorhood and decision-making.
Organizational members and research ana-
lysts tend over time to see the organizational
elements newly adopted under institutional
pressures as if they were functional, rational,
and reasonable organizational choices. This
process is analyzed with care in studies of the
developments, in American organizational
life, around affirmative action pressures and
requirements (see Dobbin & Sutton, 1998;
Edelman, 1992; Dobbin, Sutton, Meyer, &
Scott, 1993; Edelman, Uggen, & Erlanger,
1999). After the long wave of legalizing pres-
sures on organizations, a whole set of
schemes are produced – policies, offices, and
professions – responding to these pressures.
Organizations incorporate packages of these.
But after a time, it is all naturalized in the pre-
ferred models of relatively rational actorhood.
And by now, any reasonable organizational
manager would be able to explain why his or
her organization has affirmative action poli-
cies – these policies are obviously the best
way to ensure hiring the most able people.
Given that the processes stressed by the
phenomenological versions of institutional
theory are in many ways constantly undercut
or absorbed by evolving modern organiza-
tional systems, the question arises as to what
forces keep these lines of theory alive, well,
and in fact prospering. If the social world
were moving toward a modern equilibrium,
we have noted above, institutional theories
would tend to be absorbed in a socially con-
structed realist ideology. Obviously, equilib-
rium is not what is going on.
The rapid social changes distinctive to the
period since World War II have tended to
create rapid cultural expansions of the sorts
attended to by institutional theories. The
period, in other words, creates both institu-
tional theories and a globalizing social world
which operates along the lines suggested by
those theories.
Stateless globalizations
Recent centuries of development have system-
atically tended to create interdependencies
transcending the organizational capacities of
extant political systems to maintain control
(classically, Wallerstein, 1974). Rapid expan-
sion and globalization have created sweeping
economic, political, social and cultural forms
of (often conflictful) movement and integra-
tion extending far beyond the boundaries of
controlling organizational structures. Forces for
 REFLECTIONS ON INSTITUTIONAL THEORIES OF ORGANIZATIONS
social control and stability, thus, emphasize
both the authority and the responsibilities of
the existing actors in national and world soci-
ety. At the world level, meanings have piled up,
rationalizing and expanding the powers and
responsibilities of national states. And simi-
larly, individualisms, stressing the rights,
powers, and capacities of individuals, have
expanded enormously, supporting for example
the long-term and dramatic expansion of edu-
cation around the world (Boli & Ramirez,
1987; Meyer, Ramirez & Soysal, 1992). The
whole process is analyzed in Tocqueville’s dis-
cussion of social control in stateless America
(1836/1969), and his emphasis on the resultant
empowerment and control of the individual,
including the rapid expansion of a great deal of
mobilized and rationalized social organization.
The term globalization now tends to refer
to (a) economic interdependencies, and
(b) very recent time periods. But for our pur-
poses, the time frame is much longer, and the
interdependencies involved more political,
social, cultural, and military than economic.
The post World War II period represented a
dramatic up-turn in the long history. The fail-
ure of social control in an interdependent
world was dramatic and incontrovertible.
Two devastating world wars (both between
supra-state forces), a disastrous depression
seen as rooted in nationalist provincialisms,
the holocaust and sweeping destruction of
social life, and the end of normal war given
nuclear weaponry, all made it obvious that
new forms of order and control were neces-
sary. This was all enhanced by the Cold War
conflict, and by the destruction of the older
stabilizing colonial arrangements. An old
nominally-anarchic world of conflicting
nation-states was no longer remotely justifi-
able: war, for instance, lost meaning as a
heroic achievement in interstate competition.
But on the other hand nothing like a world
state was plausible.
In the absence of much possibility for
state-like world organization, with a cultural
system organized around positive law, the
world has produced an astonishing set of
socio-cultural movements building up a
797
version of a world polity or society around
notions of lawful nature, inherent rationality,
and the natural rights of humans (or, in gen-
eral, natural law: Thomas et al., 1987; Meyer
et al., 1997). These movements take the form
of broad global wave-like developments, and
a ‘wave theory’ like sociological institution-
alism is appropriate for the massive changes
involved.
Thus the character of worldwide social
change since World War II continually rein-
forces the more phenomenological versions of
sociological institutional theory. I briefly note
some of these massive social changes, and
their wave-like diffusive character. All the
changes involved refer to laws and rationalities
and rights built into nature rather than particu-
lar societies. They are built around rapidly-
expanding meaning systems and formally
structured in decentralized associational for-
mats rather than around sovereign actorhood.
First, there is in place of positive law the
dramatic expansion of science (Drori, Meyer,
Ramirez, & Schofer, 2003). Science expands
exponentially in terms of numbers of people
and amounts of resources involved, and also
in terms of the social authority it carries. It
expands enormously in terms of content cov-
erage, as essentially all aspects of natural and
social worlds come under scientific scrutiny.
And it expands spatially, finding a strong
presence in essentially all the societies of the
world. Science, as reality and even more as
metaphor, provides a cognitive and norma-
tive base for all sorts of integrating world
regulation – making the world more govern-
able (Foucault, 1991; Rose & Miller, 1992;
Drori & Meyer, 2006).
Beyond science, there is the enormous
expansion of rationalizing social science – by
far the most rapidly expanding fields in the
life of the university in the last half of the
twentieth century (Drori & Moon, 2006;
Frank & Gabler, 2006). Theories, and occa-
sionally evidence, expand rapidly and take
the center stage in much policy-making
around the world. In a world celebrating the
equality of persons and societies, rationalis-
tic social theories are seen as applicable
798 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
everywhere: any country can develop, any
person can be equipped with cultural capital,
independent of time and place. And any
organization, anywhere, can and should be a
rational actor.
Second, in partial replacement for an older
Modern celebration of the primordiality of
the national-state, there is the dramatic rise
of a natural law emphasis on human rights.
The standing of persons as citizens of
national states is replaced by a greatly
expanded set of doctrines of the person as an
entitled and empowered member of the
human race in a global society (e.g., Soysal,
1994). More and more categories of humans
are directly capacitated in this system –
women, children, old people, handicapped
people, gay and lesbian people, indigenous
people, racial and ethnic minorities, and so
on (for examples, see Ramirez, Soysal, &
Shanahan, 1998; Berkovitch, 1999; Frank &
McEneaney, 1999; Abu Sharkh, 2002). And
the moral and legal principles involved rap-
idly take coverage (though commonly not
practical effect) worldwide (Hathaway, 2002;
Tsutsui & Wotipka, 2004; Cole, 2005;
Hafner-Burton & Tsutsui, 2005).
The new human, in this expanding system,
has greatly enhanced rights, and responsibil-
ities. But also greatly expanded attributed
capacities for economic, political, social, and
cultural action. These capacities support the
extraordinary worldwide expansion in both
mass and elite education in the world since
World War II (Meyer, Ramirez & Soysal,
1992; Schofer & Meyer, 2005).
The expanded model of empowered and
entitled individuals, operating in a tamed and
scientized natural and social environment,
generates – as in Tocqueville’s America – the
expanded modern picture of the human actor;
and of the host of social organizations this
actor creates. The world is now filled with
human persons who assume the posture of
empowered actor, and have the capacity to
create and participate in collective organiza-
tions formed as social actors.
So organization and organizations blos-
som everywhere (see the studies in Drori
et al., 2006). The old nation-state, with its
passive bureaucracies, is reformulated as a
modern organization, filled with agencies that
are to function as autonomous and account-
able organizations (i.e., actors: Brunsson &
Sahlin-Andersson, 2000). Old family firms
are reconstructed as modern organizations
with empowered managerial capabilities,
and with work forces full of participatory
modern individual actors. Traditional struc-
tures housing professionals – hospitals and
schools and legal and accounting partner-
ships – are reformulated as real agentic social
actors, capable of the highly purposive pur-
suit of their own goals (Scott, Ruef, Mendel,
& Caronna, 2000).
All of the institutionalizations of the new
globalized (or ‘knowledge,’ or ‘post-
modern’) society noted above find a core
basis in the dramatically expanded educa-
tional systems of the post-War world (Meyer
et al., 1992, for mass education; Schofer &
Meyer, 2005, for the university). The univer-
sity, in particular, is the core home of the
explosions of scientific analyses of nature,
and rationalistic analyses of social life that
try to tame the modern supra-national envi-
ronment. And it is the core home where ordi-
nary persons of an older world are
transformed into knowledgeable and empow-
ered carriers of ‘human capital’ for the new
society (Frank & Meyer, 2007). If classic
bureaucratic structures of the Modern society
rested on populations equipped with mass
education (Stinchcombe, 1965), the organi-
zations of the Knowledge Society rest on
university-installed knowledge and empow-
erment (Frank & Meyer, 2007). Worldwide,
about 20 percent of a cohort of young per-
sons is enrolled in university-level training
(Schofer & Meyer, 2005).
Actors and others
The post-War period has, thus, experienced
dramatic expansion in cultural rationaliza-
tion. On the one side there has been the
exponential and global growth of the scien-
tific and rationalistic analysis of natural
and social environments. On the other lies
 REFLECTIONS ON INSTITUTIONAL THEORIES OF ORGANIZATIONS
a similarly exponential and global growth in
the rights and powers attributed to the human
beings who enter into society. And in the cul-
turally-constructed crucible at the center of
all this, the result is the extraordinary modern
growth in social actors. Passive old national
state bureaucracies turn into actors filled
with plans and strategies. And persons every-
where shift from traditional (i.e., peasant)
identities into modern schooled ones: as an
indicator, persons turned actors are able to
opine on all sorts of general questions – and
survey research can now be done almost
anywhere (Meyer & Jepperson 2000).
But the question arises, who is doing all
this cultural construction? Who or what sup-
ports the rationalization of the natural and
social environments? Who props up all the
new human rights and powers?
The world of actors – entitled and empow-
ered beings with the rights to have goals and
the capacities to be agents in pursuit of those
goals – is also a world in which the same
actors have the legitimated capacity to use
their agency in pursuit of collective goods of
all sorts. Indeed, the agency of actors is
collectively legitimated and dependent. In
this sense, a properly constructed actor is
always partly an agent for one or another
collectivity – in the modern system, often a
fairly universal one – as well as an agent for
his or her own needs and goals as actors
(Meyer & Jepperson, 2000). Thus modern
actors are partly above petty interest, and are
agents for more general and universal goods.
So the most rapidly expanding individual
occupations, worldwide, are the nominally
disinterested professions: they may partly
serve particular interests, but they are in
good part agents for the collective – more
accurately for what used to be called God
(Truth, and the like). And the most rapidly
expanding organizational structures in the
world may, similarly, be the non-govern-
mental and often non-profit organizations
that serve as agents for various universal
goods, often at the global level (Boli &
Thomas, 1999). And even among the more
mundane profit-making organizations and
799
occupations, agency with very constrained
interested actorhood has been a great
success: everywhere there are consulting
firms, therapists, advisors, researchers, and
other creatures of a higher purity.
Thus actors themselves often step out
of their narrow actorhood, and take on
the higher calling of agency for universal
truths and the collective good. So we have
successful national-states offering them-
selves to their competitors as models of the
proper conduct of business. And successful
organizations delighted to display their
virtues, rather than concealing them from
the competition. And individual persons
entering into public life with disinterested
analyses of what their President should do
(Jepperson, 2002a).
If ‘interested actor’ is one core role in the
modern system, we need a term for the roles
of actors that adopt a legitimated posture of
disinterest, and tell more interested actors
how to be and what to do. I suggest the old
Meadian concept of ‘Other’ (Meyer, 1999).
The modern world is filled with these others.
There are the representatives of the whales
and other creatures, of the distant ecological
future, and of the rights of humans in the
most distant places and cultures (e.g., over
issues like female genital cutting – see Boyle,
2002). And there are the proponents of social
rationality and critics of corruption anywhere
in the world. Closer to home, there are the
advisors and therapists, offering consultation
to individuals and organizations and
national-states on how to be more virtuous
and more effective actors.
This whole system offers explanatory
opportunities calling for sociological institu-
tional theories. The modern nominally-realist
interested actor is at every side surrounded
by institutions with much cultural character
and legitimacy – the sciences and professions
constructing the rationalized environment of
proper ‘action,’ the legal and intellectual con-
structers of expanded human rights and
capacities, and the ‘Others’ who create these
arrangements and who often directly instruct
the expanded actors. And of course, the
800 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
expanded actors themselves, who enhance
their value by displaying their virtuous actor-
hood, and whose expanded and virtuous
actorhood is utterly dependent on a host of
sciences, legal and intellectual supports, and
therapists and consultants. In fact, the
modern individual actor tends to incorporate
much of this material in the expanded ‘self.’
And the modern organizational or nation-
state actor certainly incorporates enormous
amounts of this material – often as profes-
sionalized roles – within its formal structure.
The core arguments of sociological
institutional theory: status and
prospects
Sociological institutional theory employs
general phenomenological perspectives
which often have many dimensions and
which can make up a broad vision of social
life and of methods for studying it.
Methodologically, a taste for qualitative and
highly interpretive research is sometimes
involved. Substantively, critical perspectives
on the modern liberal society are often
emphasized, sometimes from the conserva-
tive right, and on other occasions from the
left. Sometimes, society itself is seen as
entirely an interpretive construction, with
other realities entering in only insofar as they
enter social interpretive systems.
As it has developed, sociological institu-
tional theory is tied to none of these broader
philosophical perspectives. Methodologi-
cally, it has commonly been pursued with
quite standard (often quantitative) proce-
dures. Its ties to any normative perspective
on modern society are weak: at the most, it
carries an ironic distance from a naïve
liberalism. And there is no special tendency
to deny the operation of many different
theories (and variables) in the analysis of the
modern system – sociological institutional-
ism emphasizes causal structures rooted in
culture and interpretation, but is not given to
denying other lines of causal process. Thus
Barrett, Kurzman and Shanahan (2006) note
that national population control policies tend
to arise in countries with ties to modern
demography, a typical institutional argument.
But they are not surprised to find that
national population control policies tend also
to arise in countries with great population
density. Institutional theory is not closely
tied to broader philosophical concerns, but
has rather developed as a set of very general
sociological explanatory ideas.
To assess the status of sociological institu-
tionalism, we review its four most important
explanatory ideas. These ideas make up a
simple causal chain accounting for stability
and change in modern organizational struc-
tures. First, expansive modern institutional-
ized models of states and societies are
commonly generated, not only by interested
actors, but by what above we called ‘others’ –
collective participants like professions and
social movements and non-governmental
structures. Second, states and other organiza-
tions tend prominently to reflect institution-
alized models in standardized ways, not
simply the local resources and powers and
interests that vary so greatly around the
world. Third, there is the idea that because
states and other organizations reflect highly
standardized institutionalized models, but
also variable local life in practice, a great
deal of decoupling between more formal
structures and practical adaptation is to be
expected. Fourth, there is the idea that insti-
tutionalized models are likely to have strong
diffusive or wave-like effects on the orienta-
tions and behavior of all sorts of participants
in organizational life, whether or not they are
incorporated in formal policies.
Cultural and institutional forces affect the
development of institutional models
As a result of extensive research showing the
impact of institutionalized models on organi-
zations of all sorts, argumentation in the field
of macro-social research has shifted to the
question about the origins of the models
involved. For instance, we know that the
worldwide emphasis on the rights of women
has greatly impacted policy and practice
 REFLECTIONS ON INSTITUTIONAL THEORIES OF ORGANIZATIONS
everywhere (Bradley & Ramirez, 1996;
Ramirez et al., 1998). So it becomes impor-
tant to ask what produced the worldwide
emphases involved.
Very extreme realists argue that institutions
are produced by the mixture of power and
interest in the actors of the system – the only
entities such realists recognize as existing.
This makes the institutions involved relatively
minor in importance, since an adequate
analysis can be obtained simply by under-
standing the extant structures of actor power
and interest. A more moderate realism sees a
‘sticky equilibrium’ as involved – institutions
are created by mixtures of actor power and
interest, but may take on something of a life
of their own afterwards. A still more moder-
ate realism supposes that there are some
mediators in the power and interest game –
some participants (possibly professionals,
or other honest brokers) who help in the
enterprise.
Beyond this point, realism may be com-
bined with a more political or sociological
view. Stinchcombe (2001) develops an argu-
ment along these lines, imagining that actors
and perhaps some mediators struggle to work
out general institutional rules that reflect
local power and interest circumstances but
also reflect functional requirements of the
whole enterprise. In his work, he often thinks
of institutional arrangements in complicated
sectors like the construction industry as
instances. His arguments apply less clearly to
the worldwide rise of something like gay and
lesbian rights (Frank & McEneaney, 1999).
Given the great successes of institutional-
ist analyses in showing the great impact of
environmental models on the structures and
programs of organizational actors in the
modern system, realism has been on the
defensive. One position to which it has
retreated is the stance that, while moden
actors copy environmental models, these
models themselves must have been put in
place by hard-line realist forces of power and
interest. Realism has, as noted above,
strongly legitimated and legitimating roots in
the modern system, which clearly rests on
801
the assumption of very strong and agentic
human actorhood. So attacks along the line
that powerful and interested actors in the
background drive the creation of institutional
models have been intensive (e.g,
Stinchcombe, 2001; Hirsch, 1997; Hirsch &
Lounsbury, 1997). And to a striking extent,
some institutionalists have taken positions
that are almost apologetic in response (Scott,
2007; DiMaggio, 1988), apparently conced-
ing that behind the façade of institutional
structure inevitably lie real men of power.
Sociological institutionalists, of course, do
not take issue with the argument that many
institutionalized patterns may directly reflect
the power and interest of dominant states or
other organizations. But, especially under
conditions of modern globalization as we
discuss above, institutionalists observe dra-
matic effects that do not reflect the mechan-
ics of power and interest. In global society,
and also in other organizational arenas, many
other phenomena operate — reflecting the
dependence of modern expanded actors on
institutionalized scripts operating in their
environments. For example:
● Professionalized and scientized forces may gen-
erate rules coming to terms with modern sci-
ences and rationalities, and with modern notions
of human rights and welfare. Despite powerful
interests working in the opposite direction, for
instance, environmental policies like the ozone
layer agreements have taken on considerable
force (Meyer, Frank, Hironaka et al., 1997b; Frank,
Hironaka & Schofer, 2000). Similarly, it is difficult
to see power and interest – and easy to see pro-
fessionalized forces – behind the worldwide
movement to restrict female genital cutting
(Boyle, 2002). Large-scale social movement struc-
tures and non-governmental organizations are
obviously involved in the construction of many
institutional systems. Thus many programs for
organizational rationality, like the International
Standards Organization, or various bodies stress-
ing improved accounting arrangements, find their
origins in forces considerably removed from
simple matters of power and interest (see the
papers in Sahlin-Andersson & Engwall, 2002;
Djelic & Quack, 2003; Djelic & Sahlin-Andersson,
2006; Drori et al., 2006 for extended examples).
802 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
● Constructions of institutional models may reflect
successes and failures in organizational or inter-
national stratification systems, without necessar-
ily reflecting the interests of the powerful bodies
in that system. Because globalization involves
the construction of myths of underlying world
similarity, an extraordinary amount of diffusion
goes on as a matter of fashion (Strang & Meyer,
1993). So Japanese economic success of the
1980s produced a little wave of Japanified poli-
cies around the world, in no way reflecting the
purposive power or interest of the Japanese
national-state. Similarly, there is much imitation
of elite firms in any industry, whether or not the
elite firms encourage, or gain from, this imitation.
● When powerful or successful organizations in
fact portray themselves as models for others, it is
often unclear that they are acting in what is ordi-
narily conceived to be their interest. The
American national-state, for instance, likes to
encourage others to do things the ‘right’ way –
the American way – as a matter of encouraging
virtue in the world. There is no evidence that
much of this aid activity particularly benefits the
interests of the American state.
In many areas, institutional and realist expla-
nations of the development of institutional-
ized models overlap. And conflicts between
them are often conflicts over the interpreta-
tion of the effects of the same variables. Thus
when institutionalists note the impact of pro-
fessionalized models (e.g., in the accounting
area), the realists talk grimly of the profes-
sions involved as carrying out ‘professional
projects’ presumably to enhance their inter-
ests and powers (see Abbott, 1988 for exam-
ples often incorporating this sort of
reasoning). The impact of the scientists who
discovered the ozone layer problem is, how-
ever, difficult to interpret as a simple
Machiavellian scheme to enhance the power
of the sciences. And, indeed, the whole ‘pro-
fessions as plots against the body politic’
scheme runs into the problem that the picture
of the profession as a rational self-interested
actor requires the assumption that the general
population is naïve and foolish. This is unre-
alistic: explaining the expanded authority of
the sciences in the modern system requires
an institutional analysis of why so many
social audiences are so eagerly responsive
(Drori et al., 2003).
Similarly, realists tend to see any diffusive
influence of the stratification system as indi-
cating the power and interest of the elites of
that system. This is implausible. Thus, in
global society, the world environment move-
ment clearly reflects the values and orienta-
tions of American society. But the American
national-state actor clearly resists subscrib-
ing to this system, as do leading American
corporations. As another example, the world
human rights movement clearly reflects
American values: but the American national-
state actor was reluctant to have a human
rights declaration built into the United
Nations; and continues to refuse to ratify var-
ious human rights treaties. In exactly the
same way, massive worldwide efforts at all
sorts of organizational reform and rationali-
zation clearly reflect American ideologies of
organization: but the American national-state
aggressively resists participation.
Exactly the same criticisms can be made
of realist argument in other organizational
arenas. Elite universities may be sources of
much educational rationalist ideology, but
are often organizationally primitive (e.g.,
Oxford, Harvard). The same is true of elite
firms and agencies.
All in all, in the modern stateless but glob-
alized world, institutionalist arguments
explaining the dramatic rise of cultural
models of expanded actorhood show every
prospect of continued success. Only in a
more stabilized world society would the
process of social construction of actor
motivations catch up, creating the proper
appearance of an apparently realist world
society.
Institutionalized models affect
the construction of actors
The most conspicuous success of sociologi-
cal institutional theory has been in the
demonstration of powerful effects of institu-
tional models on the construction and modi-
fication of actors. Thus national-state
structures reflect standard world models,
 REFLECTIONS ON INSTITUTIONAL THEORIES OF ORGANIZATIONS
despite the enormous resource and cultural
variability of the world (Meyer et al., 1997).
Schools similarly reflect both world and
national social forms. And so do firms and
hospitals and organizations in essentially any
other sector (Drori et al., 2006). Furthermore,
extant actors of these sorts change over
time, reflecting changes in institutionalized
models.
Now that effects of this sort are widely
and routinely recognized in the field, discus-
sion shifts to questions of mechanisms.
Institutionalists, convincingly, show that
organizational conformity to standard models
is widespread and can occur in very routine
ways through taken-for-granted understand-
ings. They commonly show the effects of
processes such as simple linkage between
organizational settings and the wider environ-
ments carrying the institutions. Thus, at the
nation-state level, world models are adopted
more quickly in countries with many non-
governmental organizational linkages to
world society (Meyer et al., 1997). Similarly,
professional linkages facilitate the quick
adoption of environmental policies (Frank
et al., 2000, call the professions ‘receptor
sites’ for the local incorporation of wider
rationalized models). At the organizational
level, the adoption of fashionable personnel
policies is enhanced by having professional-
ized personnel officers (Dobbin et al., 1993).
Realists try to see processes of coercive
power as involved in such relationships, and
there are situations in which this is clearly
the case. But the rapid social changes we
have discussed as globalization continue to
generate waves of organizational change that
cannot easily be conceived as reflecting
straightforward coercive power and control
by environments. Wave-like processes are
endemic in the modern system (Czarniawska
& Sevón, 1996), and institutional theories
gain much credibility from the obvious
empirical situations involved.
Thus, with the global rise in conceptions
of the nation-state as a development-oriented
social actor, university enrollments shot
up in every type of country (Schofer &
803
Meyer, 2005). Coercive pressures were
clearly not involved – indeed the centers of
power in world society (e.g., the United
States, the World Bank, or the major corpora-
tions) tended initially to be skeptical about
the virtues of ‘overeducation’ for impover-
ished countries. Similarly, global standards
of women’s rights tended to produce national
reactions quite apart from any coercive
forces. And in other areas – like environmen-
tal policy, or efforts to build international
quality standards – where realists try to
discern coercive pressure, empirical analyses
tend to be unconvincing.
Contested areas of interpretation, here,
revolve around the impact of professional
bodies and non-governmental organizations.
The sorts of normative pressures produced
by these forces can be given something of a
realist interpretation. The problem is that the
relevant professions and associations are
amply represented inside actors, not only
outside them. That is, modern national and
organizational actors already incorporate in
their own authority systems formal represen-
tatives of the wider world cultures dealing
with the environment, organizational ration-
alization, human rights, and so on. Modern
organizations and national-states appear to
be eager to construct themselves as actors,
thus incorporating, often wholesale, global
standards (for nation-state examples, see
McNeely, 1995; or Boli, 1987).
In an expanding and globalizing world
society, people and groups everywhere seem
to be eager to be actors – this often takes
precedence over other goals, and can produce
assertions of actor identity far from any actual
actor capability. People, in short, may put
more effort into being actors than into acting.
We can see this readily in the empirical
studies of modern individuals in increasing
numbers of countries. They produce opinions
and judgments, routinely, in matters they
know nothing about. A good American,
it seems clear, would produce opinions
about whether the United States should
invade a country that does not exist. Good
organizations have policies about things that
804 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
never occur. National states promote world
norms with which they have no capacity to
conform at home. Agentic actorhood is, in
the modern system, a central good (Meyer &
Jepperson, 2000; Frank & Meyer, 2002).
Some of the intellectual tensions involved
here – between a realistic institutionalism and
an unrealistic realism – show up in a discus-
sion by Mizruchi and Fein (1999). These
researchers, committed to an older realist tra-
dition in the study of organizations, seem
puzzled by the extraordinary citation atten-
tion continuingly given to the classic paper by
DiMaggio and Powell (1983). So they turn
from their normal work as organizational
researchers to become sociologists of science
(it is often a dangerous business for social sci-
entists to study their own fields), and to inves-
tigate the uses of the classic paper. They are
disturbed by the fact that few references pick
up on the more realist themes in the paper
(coercive isomorphism, which can readily be
subsumed by realists; and normative isomor-
phism, which a realist can re-shape into con-
formity). And all the research emphasis goes
to the famous ‘mimetic isomorphism,’ which
lies far from the realist track. The reason for
this is obvious: any line of interpretation that
can be given a realist spin, in modern social
science, tends to be given that spin. So insti-
tutionalist arguments tend to survive best if
they are furthest from realism. Oddly,
Mizruchi himself later ends up employing
mimetic isomorphism as an explanatory idea
(Mizruchi, Stearns, & Marquis, 2006).
The construction of actors is often
loosely coupled with practical activity
Sociological institutional theory, in part,
arose from the observation that organizational
policies and structures are often loosely cou-
pled with practical activity (Meyer & Rowan,
1977, 1978). Given this commonly recog-
nized reality, the question arose – why are the
structures and policies there? The question
took force from the fact that conventional
theories of organizational structure empha-
size that, for functional and political reasons,
structure is put in place to control activity.
The institutionalist answer is that actor struc-
tures, forms, and policies reflect institutional
prescriptions and models in the wider envi-
ronment. Such institutional models make it
possible to build great organizations in situa-
tions where little actual control is likely or
possible – school systems, for instance; or in
developing countries, national-states.
This line of argument has had much
empirical success in the cross-national study
of national-states. It is common, now, to dis-
cover that nation-states subscribe to human
rights standards – but the subscribers are no
more likely to implement these standards
in practice than are the non-subscribers
(Hathaway, 2002; Cole, 2005; Hafner-Burton
& Tsutsui, 2005). The same finding holds for
research on child labor rates (Abu Sharkh,
2002), and for research on the education of
women (Bradley & Ramirez, 1996).
The line of argument has had dramatic
empirical success in studies of organizations,
too. Brunsson (1985; 1989), develops it as a
contrast between policy talk and practical
action. He sees a hypocritical inconsistency
between the two as a central consequence
and requirement for the rationalized society.
Thus, inconsistency that to realists is a social
problem is to Brunsson a stabilizing solution.
In other work, the line of argument is
extended to account for the high frequency of
organizational reforms, and the lack of con-
sequences of much reform (Brunsson &
Olsen, 1993). If reform is commonly a
process of constructing improved actorhood,
rather than improved action, the often-
noted ‘failure of implementation’ is to be
expected. Given the enormously exaggerated
models of the proper actor – individuals and
organizations alike – characteristic of the
modern globalized world, any respectable
reform should have excellent prospects for
disimplementation.
Despite its obvious uses, the concept of
‘loose coupling’ has been a considerable
source of tension in the field. This arises
because realist thinking is quite central to
modern ideology as well as to much social
theory. And from a realist point of view,
 REFLECTIONS ON INSTITUTIONAL THEORIES OF ORGANIZATIONS
decoupling between organizational rules and
policies and programs and roles, on the one
hand, and local practical action, on the other,
is deeply problematic. Rules are created by
powerful and interested actors, desiring to
control action. They are put in place in par-
ticular organizations because the interests of
powerful actors demanded it. They should
normally be implemented in practice. Only
limited realist theory can explain why not.
(a) Perhaps the powerful actors creating rules
want to deceive the world around them. But
if they are so powerful, why would they need
to do this? And if they do depend on impres-
sions of others, why are these others so easily
deceived? (b) Perhaps particular actors sub-
scribe formally to the rules intending to
deceive the powerful forces behind these
rules. But if so, why are the powerful forces
so easily deceived? (c) Perhaps local partici-
pants simply cheat on the organized actor,
suboptimally going their own way and vio-
lating the rules. If so, why are organized
actors so little able to notice?
The extreme tension experienced by realist
theorists over the ‘loose coupling’ notion can
be illustrated by the treatment of a renowned
initial essay on the subject. Before the rise of
new institutional theories, March and his col-
laborators, working from the ‘uncertainty’
tradition, produced a precursor. Their essay
was called ‘A Garbage Can Model of
Organizational Choice’ (Cohen, March, &
Olsen, 1972). Instead of working from
rational decision models outward to incorpo-
rate more uncertainty, this essay started from
the frame of decision-making under almost
complete uncertainty. The authors illustrated
their points with some quickly forgotten sim-
ulation models, but the impact of the paper –
on a field that had grown a bit deadly – was
simply as a strong fundamental theoretical
image or metaphor. The paper is much cited,
almost entirely for its grounding imagery
rather than its specific analytic points.
Interestingly, thirty years later, several
researchers committed to the extreme
rational choice version of realism, found it
necessary to mount a massive attack on this
805
piece of poetry (Bendor, Moe, & Shotts,
2001). They proved that the illustrative simu-
lation models (which it seems nobody had in
fact taken very seriously) were inconsistent
with the real arguments of the paper, and
made dramatic assertions about this as indi-
cating a fundamental failure of the scientific
enterprise involved. (Again, the authors
rested the importance of their paper on asser-
tions about the nature of science itself – often
a warning sign in the social sciences, e.g.,
p. 169: ‘We evaluate the verbal theory and
argue that it fails to create an adequate
foundation for scientific progress.’)
Institutionalized models impact practices
independent of organized actor adoption
In the modern system, institutionalized
forces usually diffuse more as cultural waves
than through point-to-point diffusion. Thus,
standards arise in world discourse, promul-
gated by professional consensus and associa-
tional advocacy. The new emphasis might be,
say, on the improved treatment of children
with some specific handicaps. National
states, of course, adopt appropriate policies
with some probability, which might vary
depending on their linkage to the world
organizations and professions involved.
But of course organizations internal to that
state are also immersed in responsible agentic
actorhood organized by the global culture. So
independent of national policy, schools and
medical organizations and professional asso-
ciations and even some business firms would
be likely to notice the new models and incor-
porate aspects of them. This might depend on
their own linkages to world society.
And independent of what policies and
programs states and non-state organizations
put in place, modern people too tend to be
agentic actors immersed in wider society
(including global society). So all sorts of local
actors – parents, teachers, medical profes-
sionals, neighbors, relatives – have some
probability of picking up the new world or
national story lines, independent of the
national state policies or of any organized
actor at all.
806 THE SAGE HANDBOOK OF ORGANIZATIONAL INSTITUTIONALISM
Realist theories, with very limited concep-
tions of the embeddedness of actors in wider
cultural arrangements, tend to have blind
spots on such processes. And for this reason,
realist theories – and thus much social scien-
tific theory and ideology – have the
greatest difficulty accounting for large-scale
modern social change, because such change
tends to flow through diffusive waves rather
than down through an organized realist
ladder of world to state to organization
to individual effects. The global expansion
of organization (and organization theory)
itself is an excellent example (Drori
et al., 2006).
The social scientific failures in explaining
large-scale change are stunning. The move-
ment for racial and ethnic equality, the
women’s movement, the environment move-
ment, the modern movements for organiza-
tional transparency, the breakdown of
the Communist system, the movement for
gay and lesbian rights – all these worldwide
changes were poorly predicted, and are
poorly explained, by social scientific thinking.
Empirically, research on the diffusive
impacts of world models on social practice
independent of national-state action is con-
vincing. The world models impact national
policy, certainly: but they impact practice
whether or not they impact policy. The world
movement to constrain child labor seems to
have very large effects on practice, whether
or not countries subscribe to the appropriate
prohibitions (Abu Sharkh, 2002). World
movements for women’s rights have dra-
matic effects increasing the educational
enrollment of women, independent of any
national policies (Bradley & Ramirez, 1996).
Changed world models related to reproduc-
tion impact birth rates independent of
national policy (Bongaarts & Watkins, 1996).
The world environment movement impacts
practice both through national policy and
around it (Schofer & Hironaka, 2005). It is
probably also true that the world human
rights movements have impacted local prac-
tice independent of national policy subscrip-
tions – the data on human rights practices
over time are too weakly standardized to tell
(Hafner-Burton & Tsutsui, 2005).
Similar studies at the organizational level
of analysis show similar effects. Practices in
the treatment of employees, for instance,
drift along following world or national
models in good part independent of formal
policies (Drori et al., 2006). In the same way,
the practices of teachers or doctors reflect
shifting customs in good part independent of
organizational policies (Coburn, 2004).
Realist theories have little to say about
such broader effects. So sweeping social
changes occur, at the edges of social
scientific notice. Modern society is organized
around general and cultural models, as
much as around hard-wired organi-
zational structures. And these models are
increasingly worldwide in character (Meyer
et al., 1997).
CONCLUSIONS
The rapid expansion of a stateless global
society – in transactions and perceptions
alike – has produced a great wave of cultural
materials facilitating expanding organization
at every level. Scientific and rationalistic pro-
fessionals and associations generate highly
rationalized and universalized pictures of
natural and social environments calling for
expanded rational actorhood of states, organ-
izations, and individuals. Legal and social
scientific professionals generate greatly
expanded conceptions of the rights and capa-
bilities of all human persons, transcending
national citizenship. Universities and other
educational arrangements expand, world-
wide, installing newly rationalized knowl-
edge in newly empowered persons.
So models of organized actorhood expand,
penetrate every social sector and country. All
sorts of older social forms – bureaucracies,
family structures, traditional professional
arrangements – are transformed into organi-
zations. The process is driven by a cultural
system that is a putative substitute for
 REFLECTIONS ON INSTITUTIONAL THEORIES OF ORGANIZATIONS
traditional state-like political arrangements –
realist analyses that root the process in pow-
erful interested actors miss out on most of the
important changes. The process spreads
through the diffusion of models of actorhood,
not principally via a power and incentive
system. The changes transcend practicality,
leaving great gaps between policy and prac-
tice essentially everywhere – almost any
organization can be seen as a failure, now.
And the changes diffuse at multiple levels –
through central organizations and through
their professionalized memberships and
populations.
Sociological institutional theory – especially
its phenomenological version – captures the
whole post-World War II enterprise very
well, and for this reason has been successful.
In a world less rapidly changing, the pre-
ferred realisms of modern ideology and
social theory might have constructed realist
explanations but change has been too rapid.
Realist theories and ideologies have not
caught up with the explosion of human rights
(e.g., gay and lesbian rights), of environmen-
tal doctrines and policies, of all sorts of
social rationalization (e.g., a global standards
movement), and the transformation of all
sorts of unlikely social structures into puta-
tively rational organizations.
Much social theory, however, retains its
theoretical/ideological preference for tradi-
tional realisms, leaving the great social
changes of the modern period poorly
explored. So this leaves much intellectual
space within which institutional theory can
develop. In this context, the best strategy for
institutional theory is to keep to its last, and
to avoid attending to the clamor arising from
realist ideological assumptions.
Thus, institutionalists sometimes are
instructed to seek for the interested actors
behind the new social models under con-
struction, and to assume such actors exist by
definition. This is not a good idea, and it
makes more sense to track the relevant pro-
fessions and ‘others’ who are central. Most
new models of organizational or national
structure are developed with heavy influence
807
from such sources. Naturally, successful
models tend to be derived and edited from
the most successful organizations – which
realists then call hegemonic – but this does
not mean that the interests of those organiza-
tions play a causal role.
Institutionalists are instructed to investi-
gate the realist ‘mechanisms’ by which local
structures conform to wider models: it is not
a good idea to take seriously the pretenses
of modern interested actorhood involved.
Conformity to standard models may not
involve much ‘influence’ or much decision-
making. The relevant network linkages, for
example, may simply involve the most ele-
mentary forms of information transmission.
Institutionalists are told to investigate the
assumed true linkages that powerful inter-
ested actors put between policy and practice:
it is wiser to imagine that developing the pos-
ture of the proper actor is a main goal of
modern people and groups, transcending
their needs to implement this posture in
actions. In a world in which an enormous
premium is placed on actorhood, entering
into this identity is obviously central.
Institutionalists are told that the analysis of
diffusion waves is unscientific – the only cor-
rect approach is to assume each particle in
such a wave is a properly rational and inter-
ested actor: following this advice would
mean giving up on really trying to explain the
dramatic social and organizational changes
of our period. The great changes of our
period – often poorly recognized by realist
social sciences – occur much more through
waves of conforming non-decision than
through networks of fully formed and
autonomous rationalized actors.
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 Index

(figures in bold, tables in italics)

accreditation 21, 40, 58, 67–68, 174, 220, 231, 235, alterity construction 223
532, 582, 598, 741 American pragmatism. See pragmatism
acquisitions 88, 129, 133, 394 antitrust regulations 9, 374, 547, 655, 664, 708, 747,
actor(s) 753, 794
cognitive 522 Asylums (Goffman) 279
definition 791, 799
economic 34, 304, 317, 564, 632 biotechnology 294, 440–42, 405, 606–9, 611, 613,
foreign 315 617–18
ideal types and 102–3, 109–11, 119, 121–22, bricolage 113, 117, 308, 312, 354, 413, 415, 420,
128–29, 164, 194, 230, 304, 313, 400, 483, 423–24, 426, 658
786–77 bureaucracy 101, 107, 172, 281, 367, 477, 481, 667
imitation by 223–24 business process reengineering (BPR) 220, 226
institutional 27, 118, 158, 163, 186, 190, 212, 261,
264, 427, 433, 632, 743 capitalism 101, 110, 128–29, 304, 316, 398, 400, 437,
institutional change and 158, 205, 245, 632–33 439, 450–51, 461, 484, 509, 512, 556, 654, 657,
models 567, 807 659, 666–67, 679, 695
multiple institutional environments and 305 capitalist market 101, 104
nation-state 794 categorization 112–13
networks and 374 ceremonial conformity 4
other 799–800 Civil Rights Act 374, 382
rational 62, 154, 178, 190, 390, 450, 451, 480, classification 112–13
566–67, 690, 702, 709, 792, 796, 798, 806 collaboration 26, 32, 209, 549, 554, 607–8, 614–15,
rationales of 207–9 618, 750
social 27, 59, 61, 63, 69–70, 106, 112–13, 249, 302, collective corporate social responsibility (CCSR)
308, 317, 419, 423–25, 451, 452–53, 461, 466, 371–72
476, 522–23, 541, 758, 791, 798–99, 803 commercialization 286–88, 606–12
soft 222 consumer advocates 364–66, 654–55
template use by 231 Consumer Research (CR) 364
actor-network theory 93, 281, 619, 696, 781 Consumer Union 365–66
affirmative action 22, 85, 88, 132–33, 744, 796 Consumer Watchdog Organization 364
agency contingency theory 3, 7, 11, 478, 674, 679, 746, 773
characteristics 544 corporation(s)
embedded 17, 103–4, 114–17, 120, 144–42, 198, branding 235
201–2, 634, 689, 692, 731 editing 235–36 (see also idea(s): editing)
institutional change and 633 governance 245–46, 250, 253–56, 261–62, 391–96
institutionalization and 678–79, 691 managers 396
institutional politics and 173 models 392
institutional theory and 686–88 reputation 235
temporal dimensions 526–27 takeovers 394–95
theory 396 critical realism 200, 212, 740, 756, 758, 760
See also agent(s) critical theory
agent(s) Foucault, Michael and (see Foucault, Michael)
institutional entrepreneurs and 633 of the Frankfurt School 679–80, 693–94
legitimacy 69 goals 692
models 396 institutional theory and 482, 692–93 (see also
See also agency institutional theory)
814 INDEX

critical theory (Continued) performativity and 281

logics of action in 102–4, 108, 117, 282–83, 613, scientific 234, 684
615, 618, 688. See also institutional logics social construction and 712–13, 716
and naturalization of present 679–80 theory 26, 109, 167, 485, 520, 532, 716
patterns of activity in 101, 679 dispute resolution 38, 321, 658, 660
value-orientations of 675 Durkheim, Émile 462, 473–78, 480, 482–84, 486, 545,
culture 604, 676, 710, 748, 770
measuring effects of 109
normative 53 ecology. See organizational ecology
world society theory and 462 editing. See idea(s): editing
embedded agency 17, 103–4, 114–17, 120, 144–42,
decision-making 34, 81, 172, 219, 391, 561, 567, 635, 198, 201–2, 634, 689, 692, 731
771, 796, 805 embeddedness
decoupling of actors 115–16
definition 87, 90, 346 contracts and 603
deliberate 4 institutional context and 434, 610–13
field heterogeneity and 86–87 entrepreneurs. See institutional entrepreneur(s)
forms of 86 entrepreneurship 285–88, 291
isomorphism and 78, 91 environmentalism 426, 453, 463, 655, 661
legitimacy and 79, 81–82, 396 equal employment opportunity 69, 132–33, 374, 379
measurement 85 ethnomethodolgy 276–77, 279–82, 292, 295, 491–93,
networks and 88 510, 519, 775
predicting 87–88 European Economic Community (EEC) 310
reasons for 86–87 European Union (EU) 4, 210, 310, 313–15, 751
risks 86 evaluators 63
rule avoidance and 785 event sequencing 116–17, 128–29
sustainability 88 expectation states 284–85
tradition and 333
de-institutionalization Federal Reserve 359
actors in 317 Federal Trade Commission 365
definition 327, 331 field(s)
diffusion and 303 definition 525
institutional change and 302, 630 discourse analysis and 717 (see also discourse
pressures for 332–33, 355 analysis)
process 332, 344–47, 348 heterogeneity 86, 90
social pressure and 302 institutional 19, 24, 131, 156, 161, 198–200, 203,
transnationalization and 301 205, 209–10, 255, 302–3, 416, 419, 424, 426,
democracy 101, 104, 234, 791, 796 510, 524–25, 529–30, 613, 634–36, 639, 660,
deregulation 232, 316, 438, 443, 445 687–88, 742
diffusion isomorphism and 90
coercive 6 membership 542
definition 224 movements and 652, 660–62
field-level populations and 142 multi-level 660–62
globalization and 318, 454, 456, 464, 541–42, 552 neo-institutionalism and 742
governance and 393–95 networks and 618, 742 (see also network(s))
institutional theory and 624 organizational (see organizational field(s))
isomorphism and 78–79, 89, 708 performance and 615–17
legitimacy and, 89 technical 742
legitimation and 58 types 601, 742
mechanisms for 6–7, 708 See also organizational field(s)
mimetic 6, 222–23 Food and Drug Administration (FDA) 612
models 90, 142, 230, 395, 665 form(s)
normative 6 as codes 355
politics and 664–66 creation 355
speed 306 definition 352, 355
taken-for-grantedness and 653 ecological theories of 491
theorization and 162 as identities 355
of world society models 453 institutionalization of 355–56
See also institutionalization multidimensional (MDF) 599–600
discourse analysis networks and 611
action and 714 as settlements 353–57, 368
definition 712–13 social 496
institutional theory and 162, 485, 711–16 Foucault, Michael 176, 465, 532, 555, 675–77, 680–92,
language and 531–33 694, 696–97
levels of 716 founder effect 108–9
 INDEX 815

frames 353–57 human resource management (HRM) 374, 462, 463, 685
framing 105, 121, 136 human rights 454, 457–61, 775, 798–99, 801–4, 807
cognitive 136, 785
cultural 160, 167, 183, 254, 306, 706, 785, 787 idea(s)
linguistic 152, 160 carriers 227–30
normative 160, 393 circulation 221, 223, 227, 229–30, 289
Frankfurt School of Critical Theory 679–80, 693–94. editing 225–27
See also critical theory; Habermas, Jürgen flow in networks 228
ideal types 102–3, 109–11, 119, 121–22, 128–29, 164,
genre theory 776–78 194, 230, 304, 313, 400, 483, 786–87
Global Business Coalition (GBC) on HIV/AIDS translation (see translation)
372–73, 376–85, 383 identity
globalization as bricolage 423–24
carriers in 466 centrality of 421
consequences 371 claim 418, 421, 421, 424–25
definition 300, 451, 453–56, 459, 462, 797 collective 111, 183, 266, 328–29, 331, 338, 351,
destabilization by 278, 299 355, 421
diffusion and 318, 454, 456, 464, 541–42, 552 creation 418, 420, 424
embeddedness and 466 definition 416, 419
institutional constraints from 460 distinctive nature of 422
isomorphism and 466 history and 426
limits 305–7 hybridization 421–22
movements and 373 institutionalizing 420–21
neoinstitutionalism and 452–53, 456, 465–66 institutional theory and 425–27
neoliberal theory and 450 isomorphism 419 (see also isomorphism)
organizational change and 803 meanings 420 (see also meaning(s))
outside constituents in 399 mobilization and 421
in pharmaceuticals 442 models 416
rationalization and 456, 456, 460–61, 553 performance and 424–25
realist perspective of 456 persistence 422–23, 427
research on 450, 463–64 social construction of 416
rise of 456–57 sources 128
side-effects 442 status and 422
stateless 796–98 symbols 424
of trade 373 theory 16, 35, 210, 414, 418, 494
world polity and 457–60 traditions 42
world system theory and 449–50, 452–55, 462, verification 245
465, 467 imitation
See also transnationalization broadcasting mode 228, 230–32
golden parachute 16, 133, 385, 394, 600 chain mode 228, 230–32
governance identity and 223
business systems perspective of 400–401 imperfect 626–27
comparative study 400–401 innovation and 303, 581
as control 262 models 231
cultural differences in 400 motivation for 223
cultural logics and 245 networks 84
diffusion 393–96 by others 228, 230–32, 637, 802
players 397–400 indexicality 492
pluralism 253–56 informational cascade 566
resistance to 396–97 information and communication technologies (ICTs) 373
scandals 402 institution(s)
variation 395–96 accretion 777
varieties of capitalism (VoC) approach to 400–401 agency in 135, 192
grounded theory 494 bricolage in (see bricolage)
change in (see institutional change)
Habermas, Jürgen 674, 693, 696 Chicago School and 495–96
Handbook of Leadership (Stogdill) 730 compliance 710
health maintenance organizations (HMOs) 118 creation 4, 26, 95, 105–6, 241, 272, 308–9, 327, 556,
HIV/AIDS 653, 666–68, 704, 744, 777, 782, 801 (see also
corporate assistance with 379, 382 (see also Global bricolage; institutionalization)
Business Coalition (GBC) on HIV/AIDS) cross-category comparisons of 9–10
death toll 372 cross-national comparisons 10, 28
economic consequences of 376 cultural-cognitive elements in 153, 705–11
as pandemic 371 definition 4, 20, 32, 233, 300, 483, 495–97, 703,
prevalence rates 374–75 705, 709–10, 713, 769, 794
816 INDEX

institution(s) (Continued) institutional entrepreneur(s) (Continued)

as discourse 162 professions as 544
erosion 327–28, 332, 347, 348 role in organizations 136, 528
evaluation 508 social movements as 544
historical situation of 497, 666–68 See also institutional entrepreneurship
isomorphism (see isomorphism: institutional) institutional entrepreneurship
leaders (see leadership) academic 552–54
maintenance 189–90 field and 204–5
meaning and 520–25 (see also meaning(s)) inducements 207
movements and 653–56 (see also movements) methodologies 115–16
networks and 605–10, 618 (see also network(s)) neo-institutionalism and 542–45
norms and 106, 793 power and 209
origins resources and 207–8
pluralism 244, 247–53, 258–61, 748–59 stimulus 202–4
politics in 68, 171, 173, 174 See also institutional entrepreneur(s)
power and 170, 172–73 (see also power) institutional environment 5, 27, 58, 79, 81–82, 84, 90,
as processes 498 130, 243–44, 397, 414, 421, 434, 542, 561, 564
regulative structures 32, 131, 741–42, 744, 751 institutional fields. See field(s): institutional
reproduction 26, 277, 636, 643, 657, 710–11, 743 institutionalism
resistance within 189, 192 comparative 1, 28, 450, 453
sanctions and controls in 711 ecological analysis and 573
social change and 482–84, 791 narrative 776–78
taken-for-grantedness 496, 741 (see also realist 792–93
taken-for-grantedness) Scandinavian 34, 92, 219, 222, 521, 531, 770–73
transnational 308–9 sociological 793–800
variety in 135 institutionalization
See also corporation(s); organization(s) agency and 678–79
institutional change codification in 653
actors in 158, 205 (see also actor(s)) definition 5, 11, 413, 676–77, 702
adaptive nature of 631 diffusion and 161 (see also diffusion)
ambiguity in 772 dynamics 159, 161, 233, 653
competition 631 fields and 160 (see also organizational field(s))
diffusion and 629 (see also diffusion) habitualization in 302, 309, 311, 529, 677, 743
dynamics 20, 629, 631, 654–55 identity and (see identity)
editing rules for 225–26 incomplete 631–32, 639
environmental shocks and 632 institutional theory and 676–79
event sequencing and 116 (see also event of law 159
sequencing) legitimation and 52–53, 57–58, 506
fashion and 222 models 89–90, 653, 800–806
heterogeneity and 633, 641 monitoring 653
ideas and (see idea(s)) objectification in 34, 302, 309, 311, 677, 684, 743
institutional theory and 629–34 particularities 155–56
leadership and 723–24 (see also leadership) process 157–59, 529–31, 655, 677–78, 688–89, 702,
learning and 626–42 707–8, 711, 713, 722
mechanisms 626–27, 629, 746 sedimentation in 34, 302, 309, 311, 316, 493, 511,
micro-perspective 285–92 522, 526, 529, 531, 533, 694, 743
models of 27 social construction of reality in 677–78
power effects of 190 taken-for-grantedness and 709 (see also
sources 631–34 taken-for-grantedness)
unintended consequences and 635–36 transnationalization and 300–301, 313–17
institutional context 3–6, 12, 22, 29–30, 102, 182, 434, See also de-institutionalization
544, 618–19, 636 institutional logics 21
institutional economics 390, 544, 565, 708, 718, 750. action and 602
See also organizational economics assumptions of 105
institutional entrepreneur(s) changes 100, 114–19
action 526–29 classification 112–13
as actors in 206–7, 633 culture and 105
characteristics 199–201, 208 definition 21, 100–101, 602
definition 198, 498 embedded agency and 103–4 (see also agency:
field conditions and 202–5, 634 embedded)
frames and 354 (see also frames) fields and 107, 425
institutional change and 18–21, 115, 171, 198 history 102–3, 108–9
inter-actor relationships in 209 institutional analysis and 106, 109–11, 121
legitimacy 136, 158 meta-theory of 103–9, 122
motivation 526–29 misconceptions regarding 119–20
 INDEX 817

institutional logics (Continued) isomorphism (Continued)

multiple 244, 254, 277, 604–6, 609, 616, 630, competitive 23
650–52, 655, 657–60, 665, 667 decoupling and 78, 91
origins of 119 definition 132
power structures and 112 diffusion and 79, 89, 651 (see also diffusion)
social actors and 113 dynamics 14
See also logic(s): of action environment and 81, 84
institutional order 119, 154–55, 157, 159, 161, 165, fields and 90, 703
203, 502, 505, 524, 527, 692 global 466
institutional recombination 308, 309, 313, 317 history 84
institutional theory institutional 15–17, 78–80, 84–85, 89–90, 254,
adaptation 403 420, 588
advantages 32 legitimacy and 4, 419, 785 (see also legitimacy)
basic elements 6, 308, 486 mechanisms 6, 83, 704
change and 629–34 mimetic pressures for 80, 83–84, 394, 433–34, 581,
coercive pressures in 434, 708 637, 744, 746
cognitive guidance systems in 426 model 15
contextualization 32–33 normative pressures for 80, 83, 86, 433–34, 581,
corporate governance and 389, 390–93 629, 709, 744, 776, 803
critical theory and 692 (see also critical theory) rationalized myths and 78
definition 130 sources 479
discourse and 713 surface 4
diffusion and 624 ISO 9000 25, 67, 71, 80, 303
economics and 564–67, 569
employees and 399 knowledge
exploration/exploitation and 639 acquisition 627, 727
globalization and (see world society theory) categories 104–5, 206, 280, 431, 465, 521, 547,
heterogeneity and 642 587–88, 638, 674, 680
history and foundations 3–23, 29, 99–100, 706, 708, claims 433, 614
785, 790 critical theory 680–85
institutional entrepreneurship and 539 language and 531 (see also language)
institutionalization and 676–79 management 220
institutional logics in 21 power and 681, 683–85, 687–91, 694
isomorphism and (see isomorphism) sociology of 25, 519–24, 529–33
meaning and 277 (see also meaning(s)) transmission 250, 285, 531
normative expectations in 426, 708
organizational field and (see organizational field(s)) language
organizational identity and 413–14 discourse and 531–33
pressures and 426, 433–34, 708 in institutionalization 162, 288, 292, 485, 520, 744
processual studies of 8–9 knowledge and 531, 694
prospects for 800–806 power of 158, 176, 213, 278
social construction of 2–21 taken-for-grantedness 153, 294
social movement and 137, 373, 375 leadership
rationalization and 276 external enemies and 722, 724, 729, 731, 733
realist 792–93 fads 73
social scientific inquiry in 674 institutional 256, 722–24, 731, 732, 750
taken-for-grantedness 693 (see also taken-for- legitimacy and 724, 727–28
grantedness) management and 722
translation in 403 (see also translation) organizational 132, 262–64, 423, 722, 731, 732
unintended consequences and 636 power and 732
value-orientation in 674–75, 683, 687–88, 690–91, role of 724–33
693, 695 Leadership in Administration (Selznick) 260,
See also structural contingency theory 721–23, 730
Institutions and Organizations (Scott) 51, 474, 493, 709 Leadership Quarterly 723, 730–31
integrity 246, 249, 253, 255, 260–61, 268, 422 learning
intellectual property 441, 454, 609, 611–13, 620 analysis 628
internationalization. See globalization change processes and 629–30
International Labor Office (ILO) 309, 463, 550–51 competition and 642
International Monetary Fund (IMF) 309–10, 313–14, 551 definition 627–28
international relations 301, 306–7, 318, 450, 792–93 field-level change and 636
International Standards Organization, 25, 67, 71, 80, 303 inferential 626–27, 640–41, 643
isomorphism institutional change and 627, 634–42
agentic perspective of 84–85 institutional theory and 636–37
coercive pressure for 80, 83, 86, 434, 580–81, 629, intraorganizational 636
721, 744, 776–77, 803 networks and 636 (see also network(s))
818 INDEX

learning (Continued) loose coupling 81, 90–92, 96, 251, 258, 262, 403, 453,
non-mimetic 641 459, 464, 554, 678, 688, 744–45, 755, 778, 804–5.
regulatory pressures and 642 See also decoupling
search and 637–39 Luhmann’s systems theory 545–49, 553
selective 640–41
theory 16, 627–28, 630, 634, 636–37, 639, 643 macroeconomics 435, 438
lebenswelt 520–23, 526, 529, 533 management
legitimacy evidence-based 234, 240
agents 69 fads 221, 774
antecedents 58 function 723
assessing 57, 62–63, 249 impression 17, 51, 58, 70, 87, 397
categories 18, 50, 52–53, 58, 56, 60, 67–68, 18, 303 leadership and 722
542, 544, 580, 564, 586, 727–28 new public (NPM) 220, 227, 437, 439, 551
characteristics 52, 61–62, 542, 665 by objectives (MBO) 185–86, 220, 226
consequences 58–59 supply chain 220, 226
cues to 422 techniques 220, 439 (see also specific techniques)
decoupling and 396–97 Total Quality (TQM) 58, 220, 231, 395, 423, 430,
definition 50–52, 247 485, 581, 753
and diffusion 89 marketization 234, 439
evolution 49–59, 63 Marx, Karl 193, 249, 329, 451, 453, 460, 473–76,
gain/loss of 51, 414 480–84, 486, 509, 546, 674–75, 679, 693–94, 697,
guidelines 69 748, 786
history 49 Mead, George Herbert 229, 265, 284, 473, 493–96,
interorganizational relationships and 56 500, 521, 526, 706, 772
isomorphism and 4, 422 (see also isomorphism) meaning(s)
leadership and 724, 727–28 definition 152
manipulation 59 institutional fields and 205
market access and 64 institutions and 520–25
measurement 18, 53, 60 shaping of 284, 529
media and 56 social 28, 292, 157, 418, 420, 497, 521, 750
mediators 69 world society theory and 462
mimicry in 542 mergers and alliances 116, 399, 440–41, 445, 564, 612
neo-institutionalism and 247 (see also Merton, Robert 63, 106, 281, 466, 477, 487, 495,
neo-institutionalilsm) 610, 787
pluralism and (see pluralism) Meyer John 2, 2–13, 24, 34–35, 50, 86–87, 90, 100, 153,
rationale for 51 175, 219, 222, 450, 462, 478–80, 539, 541, 550, 597,
rationalized myths in 222 (see also myths: 686–88, 707, 709, 770, 772–73, 784–85, 787, 788
rational) microsociology 282, 511, 519
reputation and 62, 66 (see also status) mimesis 23, 83, 223, 361, 414, 416, 509, 627, 653.
resource flows and 64 See also isomorphism: mimetic pressures for
sociopolitical sources 54–57, 68, 128, 506 modern organizational institutionalism 3–7, 28, 371,
status and 62, 66, 66 (see also reputation) 373, 457
subjects 54 movements
sustainability 62 against institutions 653–56, 663, 665
taken-for-granted aspects of 53 diffusion and 652, 656–57, 664–66
theories of 69 in fields 652
visibility 52–54 intra-institutional 656–60
See also legitimation measuring 663–64
legitimation 52–53, 57–58, 506. See also mobilization in 656–60, 664–66
legitimacy modeling 663–64
lesbian/gay issues 372, 374–75, 380, 382, 383, 650, origins 652
660, 667–68, 798, 801, 806 politics and 664–66
logic(s) social (see social movement)
of action 102–4, 108, 117, 282–83, 613, 615, 618, theorization and 656–57
688. See also institutional logics multidisciplinary practice (MDP) 54, 116, 158, 434–35
aesthetic 114, 128–29 multinational corporation (MNC) 28, 371, 373, 457
alternative 208 myths
competing 107, 114, 117–19, 121, 140, 187, 189, institutional 11, 29, 50, 58, 70, 152–53, 155, 190,
190–91, 602, 608, 651, 655 208, 493
editorial 105, 107, 111–12, 114, 117, 129, 133 rational 3–9, 12, 20, 24–25, 28, 30, 61, 78–81, 152–53,
efficiency 128–29 156, 218–20, 222, 561, 597, 707, 752, 758
evolution 133
institutional (see institutional logics) National Institutes of Health (NIH) 608–9
market 105, 107–8, 111–14, 116–17, 121, 129, 224, nation-states 301, 308–10, 371, 423–24, 427, 449–53,
339, 747 455, 457–59, 461–64, 541, 550, 552, 668, 752,
organizational actions and 111–14 791–94, 796, 803–4
 INDEX 819

negotiated order 500–502 organization(s)

neo-institutionalism accountability 443–46
analysis levels 752–53 behavior 5, 433
assessment 745–47, 754–55 categories in 293, 439
causal relationships 745 ceremonies 725, 747
change and 263 (see also organizational change) change (see organizational change)
cultural/cognitive mechanisms 253 character 722
diffusion and 555 (see also diffusion) competition 576
entrepreneurship and 553 cultural shaping 541
field and 742, 752 density dependence 575–76
governance and 253–54 (see also governance) diversity 574–75
history 491, 706, 739 failure 283, 575–78, 586–89
homogenizing forces 554–55 field membership and 542
institutionalization and 352, 741–43 (see also governance 245–46, 250, 253–56, 261–62
institutionalization) health care 99, 107, 439, 575
legitimacy and 616 (see also legitimacy) hypocrisy 8, 778
macro-perspective in 541 idea adoption 220–27, 395
meso-perspective 542–45 identity (see identity)
movements and (see movements) inertia 576–77
networks and 742 institutional contexts of 3, 6
political science and 751 institutionalization of 4, 246
postmodernism and 757–58 institutional theories of 78, 477–80
power and 746 internal consistency 725–27
self-reflection in 779 international 454 (see also globalization)
social construction and 717 isomorphism and (see isomorphism)
social mechanism approach to 756–57 leadership 113, 132, 262–64, 423, 434, 722,
societal sector in 81–82, 103–4, 119, 121, 480, 543, 731, 732
639, 752, 794 learning (see learning)
tendency analysis in 743–45 legitimacy (see legitimacy)
theory 131, 163, 170, 368, 547–50, 555, 605, 651, logics 235 (see also logic(s))
663–68, 677, 687, 693, 711, 716–17 memory 627, 639
network(s) mergers (see mergers and alliances)
decoupling and 88 monitoring 235
directors 375, 384, 399 mutualism 576, 610
embeddedness 618 naming patterns 415
fields and 602 negotiated order of 500
individuals and 613 network contexts of 6
institutional logics and 604 (see also institutional non-profit 9, 357, 364, 372, 385, 541, 575, 655,
logics) 785, 799
institutions and 597–601, 605–10, 618 organizing in 234
social 88, 207, 307, 384, 395, 419, 434, 503, 508, power contests in 9, 111–12 (see also power)
555, 565, 598–99, 600, 604 professional networks and 374
theory 16, 31, 82, 93, 281, 596, 601–2, 604, rational-legal authority in 477–79, 481
618–19, 696 reputation 59
as transmission channels 597–98 resources in 64, 576
new institutionalism (NI). See neo-institutionalism responses to institutional pressures 16
new public management (NPM) 220, 227, 437, scandals in 443–46
439, 551 social facts and 84–85, 113, 131, 251, 462, 475, 477,
non-governmental organizations (NGOs) 202, 312–14, 695, 704
451, 460, 463, 740 social movements and 373 (see also social
non-profit organizations 9, 357, 364, 372, 385, 541, movement)
575, 655, 785, 799 as source of legitimacy 56
North Atlantic Free Trade Association (NAFTA) 310 status 59, 111 (see also status)
nouvelle cuisine 361–64 structural overlap in 116
survival of 58
organization(al) theory symbols in 415
concepts 741–43 technology and 439
contingency theory and 773 (see also contingency theory (see organization(al) theory)
theory) transmission of practices in 10
history 1, 3, 14, 33 vision 725–27, 731, 732
institutionalism and 14, 474, 625 organizational change
isomorphism in 79–90 (see also isomorphism) by bricolage (see bricolage)
leadership and 730 (see also leadership) globalization 803
legitimacy in (see legitimacy) inertia 576
Litchfield/Thompson and 741–56 institutional change and 423
See also neo-institutionalism leadership and 724 (see also leadership)
820 INDEX

organizational change (Continued) positivism 274, 511, 558, 750, 760, 777
organizational ecology and 568, 577 (see also postmodernism and 129, 740 756–58, 760
organizational ecology) power
pluralism and 245, 256–60, 262–63 avoidance 393, 508, 600
processes 259, 576–77 categories 173–74, 177–78, 180, 187, 190, 682–85,
social movements and 137, 756 (see also social 687, 689–90, 692
movement) competition for, 111–12
See also institutional change corporate governance and 390
organizational ecologists 342. 352, 355, 368, 422, 566, decoupling and 87
568–69, 574, 579, 585 definition 174, 188–89, 684–85
organizational ecology 3, 55, 259, 263, 352, 368, 566, dynamics 157
574–80, 583, 586 force and 188–89
organizational economics 560–62, 564. See also institutional theory and 686–88
institutional economics institutions and 170, 172–73, 390, 481–82,
organizational field(s) 523–26
actors and 140 knowledge and 683
agency in 135 leadership and 732
change in 135, 139 meanings and 157
configurations 133–37 obedience to 390
constituents 131, 543 as object of research 187–88
construction 160 in organizational fields 192
definition 130–31, 138, 224, 303, 479, 505, 543, 601 politics and 547
emerging 204 resistance to 390
filtering processes and 136 sources 112
history 131–33, 143 stereotypes and 285
homogenizing forces in 541–45 struggles among organizations 9
identity and 224 subjectification and 683–85
institutional logics 425 (see also institutional logics) pragmatism 265–66, 520, 523, 528, 749, 772
mature 204 prestige
membership 542 legitimacy and 66, 66
social evolution and 548–49 media 56
social movements and 303 occupational 99, 112, 128–29, 285, 422, 433, 597
social world and 505 stereotypes and 285
sociology of knowledge and 524–25 (see also Principles of Scientific Management (Taylor), 396
sociology: of knowledge) professional services and practice
subject position and 201–2 academic scientists and 433
success of 63 change in 434–35
structuration of 6 characteristics 432
variety in 135 client interactions in 436–37
See also field(s) conditions of 432
organizational forms. See form(s) definition 432
organizational homogeneity theory 7 delivery 431
organizational institutionalism 5, 50–52, 301–4, demographics 435–36
531–33 as institutional entrepreneur 544
Organization for Economic Co-Operation and institutional theory and 433–35
Development (OECD) 309, 551–52, 556 knowledge claims and 433
orphan drugs 612 markets and 437–39
models for 432
paradox of embedded agency 115, 198, 201–2, 634, technology and 436–42
663, 689, 692. See also agency: embedded progressivism 107, 367, 667
performativity 281–82 punctuated equilibrium 108, 256–57, 652–53,
pharmaceutical companies 60, 191, 305, 372, 379–82, 667, 793
385, 433–34, 440–41, 445, 582, 606, 609–10, 641
pluralism rationalization
adaptation to 250 cultural 100, 461–62, 463, 798
categories 244, 247–53 definition 452, 461
change and 258 globalization and 456, 456, 460–61, 553
comprehensiveness 748–54 indicators 13
consequences 244–45 legitimation and 58
legitimacy and 249–50, 260–61 market 108, 120
variable effects of 258–59 moral 234
point of provider organizations (PPOs) 118 of society 541–42, 795, 807
poison pill 16, 133, 374, 380, 384–85, 394, 482 taken-for-grantedness of 276
population ecology 11, 22, 35, 79–80, 90, 574, 629, 740, rationalized myths 3–9, 12, 20, 30, 78–81, 53, 220,
760, 772, 785–86. See also organizational ecology 222, 279, 561, 597, 707, 752, 758
 INDEX 821

realist theory 450, 452, 455, 792–93, 795, 805–7 social world 502–5, 541–55
reality construction 265, 520, 524, 532–33, 677–78, 696, societal institutionalism 301, 304–5
713. See also institutionalization: social construction society
of reality in; Social Construction of Reality, The ‘audit’ 231, 235
reciprocal typification 34, 631, 677, 702, 706, 713 as body of institutions 493
regulation characteristics 545–54
agencies 5 definition 540
decoupling and 87 differentiation 540, 545–46, 552–53
expansion 233 dynamics 547
global 379, 797 evolution 547–49
governance and 233 homogenizing forces in 541–45
networks 308 as inter-institutional system 104–5
rate 97, 273, 654–55, 662 systems 546 (see also systems theory)
soft 231, 233, 311 sociology
See also deregulation Chicago School of 493–94, 510–13, 772
regulatory activism 232 economic 565, 603
reputation 59–60, 62–63 focus 473–74
resource historical 474
-dependence theory 3, 5, 13, 51, 584 institutionalism in 705–6
mobilization 207–8 interactionist 495–96
partitioning 576 of knowledge 25, 519–24, 529–33
Rules of the Sociological Method (Durkheim) 475 neo-institutional 51
Spencer, Herbert 473–76, 480
Scandinavian institutionalism 34, 92, 219, 222, 521, stakeholder theory 244, 264
531, 770–73. See also institutionalism status
science competition for, 61, 111–12
academic 659 enhancement 63
expansion 797 expectations 284–85
institutionalization 659 honor and 61
neuro- 285, 555, 614–15, 617 legitimacy and 59–61 66
society rationalization and 542 organizational resource flows and 64
sensemaking 30, 139, 276, 278, 282–85, 290–93, segregating nature of 61
295–96, 414, 425, 602, 653 sources 112
service learning 160–61 structural contingency theory 3, 7, 10
settlement(s) 353–55, 356, 357, 368 Studies in Ethnomethodology (Garfinkel) 278, 295
small business industry corporations (SBICs) 357–61 supply chain management 220, 226
social capital 398, 565, 597, 603–5, 611, 618, 632 symbols 415, 424, 531–32
social change 452, 482–84, 486 systems theory 545–49, 553
social construction
actors in 222 (see also actor(s)) taken-for-grantedness 54, 68, 248, 288, 303, 392, 530,
discourse analysis and 162, 712 575, 587, 693, 703, 710, 717, 776
forms and 368 (see also form(s)) technology
of identity 416, 421 information and communication (ICT) 373
institutional theory and 2–21, 704–9 in institutions 774–75
institutions and 163, 188, 222, 491–93, 585, 677–78 norms 774–76
interactional rituals and 279 transfer 287–88, 294, 441, 554, 608, 611, 616, 618
of legitimacy 506, 508 templates
neo-institutional theory and 717 for action 132, 191
of reality 465, 524, 677–78, 713 (see also Social circulation 232–33
Construction of Reality, The) creation 230–36
Social Construction of Reality, The (Berger and cultural-cognitive 133, 306, 419, 426
Luckman) 278, 519, 533, 677, 748 institutional 479, 496
social meaning 28, 292, 157, 418, 420, 497, 521, 750 isomorphism and 233
social movement logics and 605
institutional change and 170, 303 organizational 236, 303, 602
as institutional entrepreneur 544 text 712–13
institutional theory and 137, 375 theory
organizations 87, 137, 186, 373, 378, 395 actor-network 93, 281, 619, 696, 781
social movement theory 19, 24–25, 137, 208, 210, 353, agency 396
370–71, 373, 375, 378, 385, 506, 663, 650–51 contingency 3, 7, 11, 478, 674, 679, 746, 773
social order 5, 234, 279–82, 318, 475, 493–94, 500, covering law 740–41
528, 631, 693, 771 critical (see critical theory)
social psychology 58, 69, 278, 282, 494, 760 discourse 26, 109, 167, 485, 520, 532, 716
social systems 53, 56, 175–76, 178, 188, 247, 301, 305, enlightenment 740
392, 398, 474, 484, 605, 618 genre 776–78
822 INDEX

theory (Continued) tradition (Continued)

grounded 494 at Texas A&M 334–44
identity 16, 35, 210, 414, 418, 494 transmission 219, 294, 329
institutional (see institutional theory) transaction cost theory 28, 491, 562
learning 16, 627–28, 630, 634, 636–37, 639, 643 translation 17, 24, 28, 35, 85, 92–93, 142, 156–57,
narrative 740 161–62, 164, 205, 224–28, 403, 521, 565, 652, 658,
neo-institutionalism 131, 163, 170, 368, 547–50, 770–74 (see also institutionalism: Scandinavian)
555, 605, 651, 663–68, 677, 687, 693, 711, transnational communities 310–11
716–17 transnational cultural models 306
neoliberal 450 transnationalization 300–301, 313–17. See also
network 16, 31, 82, 93, 281, 596, 601–2, 604, globalization
618–19, 696 transnational recombination 311–12
organizational (see organization(al) theory) transnational social networks 307
realist 450, 452, 455, 792–93, 795, 805–7 transparency 91, 231, 234–35, 237, 431–32, 435,
resource-dependence 3, 5, 13, 51, 584 694, 806
social movement 19, 24–25, 137, 208, 210, 353,
370–71, 373, 375, 378, 385, 506, 663, 650–51 UNESCO 463, 550
stakeholder 244, 264 United Nations 62, 309, 372, 377, 380, 459, 752, 802
structural contingency 3, 7, 10 universities 99, 243–45, 250–51, 276, 285–88, 292,
systems 545–49, 553 294, 334, 345, 436–37, 443–44, 548, 552–54,
transaction cost 28, 491, 562 606–10, 612, 615–17, 729, 798, 802, 806
world society 449–50, 452–55, 462, 465, 467 utopianism 260
thrifts 366–68
Total Quality Management (TQM) 58, 220, 231, 395, venture capital 26, 358–61, 553, 607–13
423, 430, 485, 581, 753 venture capitalists 358–61, 434, 441, 609, 611, 613
tradition vocabularies
assimilation and 333 change 160
categories 85, 462–64 institutional 109, 115, 136, 158
change in 330–34 legitimated 153
characteristics 294, 328–30, 349 management 220
competition of 333 of motive 101, 511, 532
creation 330 of structure 153
custodians of 346, 348
dilution and 333, 346 Weber, Max 3, 50, 53, 79, 112, 155, 229, 281, 329,
disembedding and 333 462, 473–81, 486, 519, 521, 526, 545, 695, 746,
displacement 348 748, 770, 786
dissipation 331–32, 332, 348 welfare state 549–54
erasure 333 women’s issues and rights 10
erosion 331–34, 344–47 World Bank 309, 310, 314, 483, 752, 803
in institutional entrepreneurs 158 world culture 460–62
as institutionalized practice 330–31, 434 World Economic Forum (WEF) 375–76
migration 348 world polity characteristics 457–60
reconstruction 347 world society theory 449–50, 452–55, 462, 465, 467
sensemaking and 293 world system institutionalism 301, 305–6, 308
taken for granted nature 329 World Trade Organization 25, 184, 309, 314