Article review - Institutional Theory

8/4/2019 Article review - Institutional Theory

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The Iron Cage Revisited:Institutional Isomorphism and Collective

Rationality in Organizational Fields

DiMaggio & Powell (1983)

Organization Theory

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Introduction

Under capitalism the rationalist order has become aniron cage that has imprisoned humanity.

Weber (1968) wrote that the engine of organizationalrationalization was competition among capitalist

firms, states, or rulers need to control. The causes of bureaucratization and rationalization

have changed

Change occurs as the result of processes that makeorganizations more similar but no necessarily moreefficient.

The homogenization processes emerges through a processof structuration effected by the state and the professions.

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Organizational Theory and Organizational

Diversity Unit of analysis: organizational field:

Organization + key suppliers, resources and product consumers,regulatory agencies, and other organizations that producesimilar services or products.

Connectedness: Transactions among organizations.

Structural equivalence: similarity of position in a network structure.

Fields are institutionally defined: Process of structuration

An increase in the extent of interaction among organizations in the field.

Emergence of of sharply defined interorganizational structures ofdomination and patterns of coalition.

Increase in the information load with which organizations contend.

Development of mutual awareness among participants in a set oforganizations involved in a common enterprise.

Once disparate organizations in the same line of business arestructured into fields, powerful forces emerge that lead them tobecome more similar to one another.

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Mechanisms of Institutional Isomorphic Change

The concept of isomorphism:

Constraining process that forces one unit in a populationto resemble other units that face the same set ofenvironmental conditions.

Organizations are rewarded for being similar: make it

easier to make transactions, attract staff, gain legitimacyand eligibility for private and public grants and contracts.

Two types of isomorphism:

Competitive: based on market open competition fields

(Weber style) Institutional: organizations compete for political power

and institutional legitimacy, for social as well as economicfitness.

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Three mechanisms of Institutional Isomorphism change:

Coercive isomorphism

Formal and informal pressures exerted on organizations by otherorganizations with which they are dependent and by culturalexpectations

Introduction of standard procedures, or organizational models on

dependent organization (for example subsidiaries)

Mimetic processes

Uncertainty (technology, goals, or environment) is a power force forimitation among organizations.

Organizations model themselves after similar organizations that areperceived to be more legitimate or successful.

Normative pressures

Collective struggle of members of an occupation to define and controltheir conditions and methods of work.

Two sources: formal education and professional networks

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General pattern observations:- Organizational fields that include a large professionally

trained labor force will be driven by status competition.

- Organizational prestige and resources are key elements in

attracting professionals Isomorphism:

This process encourages homogenization as organizations

seek to ensure that they can provide the same benefits

and services as their competitors

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Predictors of Isomorphic Change

Organizational-level predictors A1- the dependence of an organization on another organization,

similar it will become to that organization in structrue, climate, andbehavioral focus.

A2- the centralization of organization As resource supply, the extentto which organization A will change isomorphically to resemble theorganizations on which it depends for resources.

A3- uncertain the relationship between means and ends the extentto which and organization will model itself after organizations it perceivesto be succesful.

A4- ambiguous the goals of an organization, the extent to which theorganization will model after organizations that it perceives to besucessful.

A5- the reliance on academic credentials in choosing managerial staffpersonnel, the extent to which an organization will become like otherorganizations in tis field.

A5b- the participation of organizational managers in trade andprofessional associations, likely the organization will be, or will become,like other organizations in its field.

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Predictors of Isomorphic Change

Field-level predictors: B1 the extent to which an organizational field is dependent

upon a single(or several similar) source of support for vitalresources, the level ofisomophism

B2 the extent to which the organizations in a field transactwith agencies of the state, the extent of isomorphism in the

field as a whole. B3 the number of visible alternative organizational models

in a field the rate ofisomophism in that field.

B4 the extent to which technologies are uncertain or goalsare amiguous within a field, the rate ofismorphic change.

B5

the extent of professionalization in a field, the

amount of institutional ismorphic change.

B6 the extent ofstructuration of a field, the degree ofisomorphics.

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Implications

Institutional isomorphism can complement views from

theories on population ecology.

Instit. Isomorphism introduces the political struggle for

organizational power and survival.

Explaining the genesis of legitimated models

Introducing the views of power to define norms and standards that

shape and channel behavior; and critical intervention power to justify

how appropriate models of organizational structure and policy go

unquestioned for years to come.

Need to discover new forms of coordination that

encourage diversification rather than homogenization.

Promoting pluralism in the organizational field. (discussion

point)

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Article review - Institutional Theory