The Response of Organizations to their Environments

1. The Response of Organizations to their Environments And the changing contexts of Institutional Theory Tracy Alberry EDU 730 Spring 2009

2. Key Terms • New Institutionalism • Structuralism • Legitimacy • Isomorphism

3. New institutionalism or neoinstitutionalism • “describes social theory that focuses on developing a sociological view of institutions--the way they interact and the way they affect society. It provides a way of viewing institutions outside of the traditional views of economics by explaining why so many businesses end up having the same organizational structure (isomorphism) even though they evolved in different ways, and how institutions shape the behavior of individual members.” From: http://www.answers.com/topic/new-institutionalism

4. Meyer and Rowan • Organizations adopt the practices and procedures employed by successful organizations – assumed to be rational based on another organization’s success–in hopes that they too will succeed. • Describes how today’s formal structure of organizations reflects the “myths” of the institutional environment rather than the “demands of work • Meyer and Rowan explain that organizations incorporate the practices and procedures defined by rationalized concepts to increase their legitimacy.

5. THE IRON CAGE REVISITED: INSTITUTIONAL ISOMORPHISM AND COLLECTIVE RATIONALITY IN ORGANIZATIONAL FIELDS • “Structural change in organizations is less driven by competition or efficiency. Rather, bureaucratization and organizational change occur as the result of processes that make organizations more similar without necessarily making them more efficient. Bureaucratization and other forms of homogenization emerge, we argue, out of the structuration (Giddens, 1979)” DiMaggio & Powell (1983) Scott would argue that organizations become similar in hopes of becoming as successful as other organizations. Organizations choose structures that will make them more acceptable to the culture or society.(legitimacy)

6. THE IRON CAGE REVISITED: INSTITUTIONAL ISOMORPHISM AND COLLECTIVE RATIONALITY IN ORGANIZATIONAL FIELDS Structuration consists of four parts: • an increase in the extent of interaction among organizations in the field; • the emergence of sharply defined interorganizational structures of domination and patterns of coalition; • an increase in the information load with which organizations in a field must contend; • and the development of a mutual awareness among participants in a set of organizations that they are Involved in a common enterprise (DiMaggio, 1982). Do we see structuration in Education?

7. Isomorphism from Dimaggio & Powell (1983) • Isomorphism is a "constraining process that forces one unit in a population to resemble other units that face the same set of environmental conditions". " There are two types of ismorphism: competitive and institutional, "Organizations compete not just for resources and customers, but for political power and institutional legitimacy, for social as well as economic fitness". • If there is uncertainty, some organizations may try to imitate or model other organizations.

8. Isomorphism • Do we see isomorphism in current trends in education? • What are some examples?

9. INSTITUTIONAL THEORY ACCORDING TO SCOTT • Institutional theory is related to the aspects of social structure. “It considers the processes by which structures, including schemas, rules, norms, and routines, become established as authoritative guidelines for social behavior. It inquires into how these elements are created, diffused, adopted, and adapted over space and time; and how they fall into decline and disuse. Although the ostensible subject is stability and order in social life, students of institutions must attend not just to consensus and conformity but to conflict and change in social structures” (Scott , p. 1, 2004).

10. ORGANIZATIONS SOCIALLY CONSTRUCTED • According to Scott, in an unpublished paper by Meyer, Meyer (1970) suggested that much social order is a product of social norms and rules that constitute particular types of actors and specify ways in which they can take action. Such behaviors are not so much socially influenced as socially constructed. Pg 5.

11. W. Richard Scott, "Unpacking Institutional Arguments" • Scott focuses on the importance of environments and the importance of different cultures and the roles those play in organizations. Scott sees organizations as having not just one but multiple environments. These environments affect an organizations forms and functions.

12. Scott pulls from the work of Meyer and Rowan • Formal Structures: blueprints of the organizations activities such as listing of offices, departments and programs linked by explicit goals and policies that make up the rational theory of how all the organization’s activities fit together (Meyer and Rowan, 1991).

13. Scott-Distinction between Institutional and Technical Technical Environments • Exercise output control over organizations-rewards for effective and efficient control of the work process (service or process) • Complex technologies • exchanges Institutional Environments • reward organizations for implementing the correct structures and processes • Rules • Socially defined categories (Scott, p. 167) Most organizations have both. Seems to be a “new cultural emphasis”.

14. Legitimacy • Legitimacy is the way organizations claim societal values. Organizations deal actively and strategically with their environments. Their goal is to gain legitimacy.

15. Legitimacy • Legitimacy is the societal evaluations of organizational goals. • Explaining or justifying the means to an end. • Meyer and Scott (1983) organizational legitimacy refers to the degree of cultural support for an organization.

16. Scott specifically: This article examines • how institutional environments affect organizational focus and functions. • It examines causal arguments being made. • How cultural and structural elements in environments affect an organization • Creates the argument between new and old institutional theories

17. Old vs. New • Scott seems to be presenting the new institutional theory versus the old • Selznick (1996) summarizes - maybe the old and new theories of institutional environments are not so far apart. • He warns that if you differentiate between the old and the new, it may affect the contribution of institutional theory to major issues of bureaucracy and social policy.

18. Scott presents seven arguments to explain the ways environments affect organizations. • The Imposition of Organizational Structure • The Authorization of Organizational Structure • The Inducement of Organizational Structure • The Acquisition of Organizational Structure • The Imprinting of Organizational Structure • The Incorporation of Environmental Structure • The Bypassing of Organizational Structure

19. Imposition Imposition describes the situation when environmental agents exist that have sufficient power to impose structural forms on subordinate organizational unit.

20. Authorization • authorization, differs because the subordinate unit is not compelled to conform to the environmental demand but does so voluntarily in order to receive legitimating. Some environments do not have agents with the power and/or authority to impose organizational change.

21. Inducement • In this scenario inducement mechanisms emerge whereby environments provide incentives (e.g. funding) to organizations that comply with the environmental agents’ demands.

22. Acquisition • The deliberate choosing of structural models by organizational actors. • The adoption of institutional designs in order to be more modern, appropriate or rational. • Voluntary adoption of structural patterns.

23. Imprinting • In some situations imprinting occurs where the structure of the organization follows the basic logic common to most organizations in the same environment at the time of the organizations founding.

24. Incorporation Incorporation refers to the tendency of organizations to have things happen that may not be intended. The more complex the environmental elements the greater the administrative complexity and the less program coherence.

25. Bypassing • Bypassing occurs when institutionally shared beliefs, rather than organizational structure, determine actions. • Orderliness and coherence in American schools is based on institutionally shared beliefs rather than organizational structures (Meyer, Scott and Deal, 1981)

26. Scott Summary • Scott shows us that organizations face many types of organizational structures that are affected by cultural systems. He seems to argue that organizations may have some choice in selecting the cultural “systems with which to connect”. • The seven mechanisms/arguments presented should be further examined in relation to developing institutional theory.

27. References • DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147-160. • Meyer, J. & Rowan, B. (1991) Institutionalized organizations: Formal structure as myth andceremony.In Powell & Dimaggio, The new institutionalism in organizational analysis, 63-75.

28. References • Scott, W. Richard. (1991). "Unpacking institutional arguments." Pp. 164-182 (Ch. 7) ) in Walter W. Powell and Paul J. DiMaggio (Eds.), The New Institutionalism in Organizational Analysis. Chicago: The University of Chicago Press. • Selznick, P. (1996). Institutionalism "Old" and "New". Administrative Science Quarterly, 41(2), 270-277.