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17 Institutional Theory - Pg. 145

17 Institutional Theory Institutional theory addresses the central question of why all orga- nizations in a field tend to look and act the same (DiMaggio & Powell, 1983). The core concept of institutional theory is that organizational structures and processes tend to acquire meaning and achieve stability in their own right, rather than on the basis of their effectiveness and efficiency in achieving desired ends, such as the mission and goals of the organization (Lincoln, 1995). In the initial stages of the organizational life cycle, there is con- siderable variety in organizational forms. Over time, however, there is startling homogeneity in organizational structures and practices. Institutional theory posits that institutions are a critical com- ponent in the environment. Institutions have been defined as "regulative, normative, and cognitive structures and activities that provide stability and meaning for social behavior" (Scott, 1995, p. 33). Examples of institutions include laws, regulations, customs, social and professional norms, culture, and ethics. Institutions exert a constraining influence over organizations, called isomor- phism, that forces organizations in the same population to resem- ble other organizations that face the same set of environmental conditions (Hawley, 1968). Institutions exert three types of isomorphic pressure on orga- nizations: coercive, normative, and mimetic (DiMaggio & Powell, 1983). Coercive isomorphism refers to pressure from entities who have resources on which an organization depends. Mimetic iso- morphism refers to the imitation or copying of other successful organizations when an organization is uncertain about what to 17 145